Global inflation has a significant impact on the economies of developing countries. One of the main reasons is the dependence of these countries on imports of goods and services. Rising prices of raw goods, especially commodities such as oil and food, can cause production costs to spike, which ultimately harms consumers. About 40% of the population in developing countries spends most of their income on basic needs. When inflation exceeds acceptable wage levels, people’s purchasing power will decline. Increases in interest rates by central banks in developed countries in response to inflation can affect foreign investment flows to developing countries. Investors tend to shift their funds to more stable markets, thereby reducing the availability of capital needed for growth. As a result, infrastructure projects and economic development can be hampered. This creates a negative cycle in which instability reduces growth, which in turn exacerbates inflation. In addition, global inflation affects the international trade sector. Developing countries often have products that compete in global markets, but if the price of domestic goods increases, their competitiveness decreases. This can cause the trade surplus to shrink, which affects the currency exchange rate. Currency depreciation also worsens inflation by increasing the cost of imports. The fiscal health of developing countries is also threatened by global inflation. Many governments in these countries have limited budgets, and inflation can lead to larger budget deficits. The costs of public services such as health and education are rising, but government revenues are not always increasing commensurately, creating imbalances and increasing public debt. The social impact of inflation is also worth noting. Public dissatisfaction can increase when inflation hurts low-income groups. Social protests and political instability may occur in response to economic policies deemed ineffective. Countries with fragile social structures are more vulnerable to turmoil due to inflation. However, there is also the potential for resilience in the face of global inflation. Some developing countries, such as Vietnam and Ethiopia, are adapting by shifting their focus to local agriculture and production, reducing dependence on imports. Investments in technology and innovation can help increase efficiency and reduce production costs. Finally, international collaboration is becoming increasingly important in addressing this problem. International organizations, financial institutions and developed countries need to work together to provide technical and financial support to developing countries. This aims to build better economic capacity and mitigate the detrimental effects of inflation. This shows that although global inflation presents challenges, with the right strategy and global cooperation, developing countries can find ways to reduce its negative impact.
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