C. Inflation Factor EssayGlobal growth remains noticeably above the historical trend, while inflation and long-run interest rates are unusually low. Global headline inflation has picked up in response to higher oil prices, but core inflation has been little affected and inflationary expectations remain well grounded. This has raised questions as to whether low inflation reflects deflationary. pressures from other sources, notably globalization, or whether there is a danger that the inflationary impact has simply been postponed.The global inflation rate has declined from an annual average of close to 15 per cent in 1980-84 to 3. 8 per cent in 2005. The average inflation rate in the industrial economies fell from almost 9. 5 per cent between 1975 and 1979, and nearly 9 per cent in the early 1980s, to 2. 3 per cent in 2005 and is projected to decline further. In developing countries, the decline has been even steeper and more rapid. In the early 1990s, the average inflation rate in developing countries was around 80 per cent; that had declined to 5. 4 per cent by 2005.
