Cumulative Inflation Approaches 25% in Key Economies, Eroding Purchasing Power Since 2020

A recent social media post by Bryan Beal, stating, > "Losing 25% of your purchasing power in 5 years is insane," highlights a significant concern for consumers globally. This stark observation reflects the substantial erosion of buying power experienced in many major economies since 2020 due to persistent inflationary pressures. While the exact figure varies by region, cumulative inflation in countries like the United States has approached this 25% mark over the past five years.

The period from 2020 to 2025 has been characterized by a confluence of economic shocks. The COVID-19 pandemic initially disrupted global supply chains, followed by a surge in demand as economies reopened. Further exacerbating the situation were geopolitical events, notably the Russia-Ukraine war, which drove up energy and food prices worldwide. This combination fueled inflation rates unseen in decades across many developed nations.

The impact of this inflationary environment has been profound, directly affecting the daily lives and financial stability of households. As prices for essential goods and services climbed, the real value of wages and savings diminished. Lower-income earners have been disproportionately affected, as a larger portion of their disposable income is allocated to necessities that experienced the sharpest price increases.

Central banks responded by aggressively tightening monetary policy, raising interest rates to curb demand and bring inflation under control. Institutions like the U.S. Federal Reserve, the European Central Bank, and the Bank of England initiated a series of rate hikes starting in 2022, aiming to restore price stability. For instance, the U.S. Federal Reserve raised its benchmark interest rate from near zero in March 2020 to over 5% by mid-2023.

While major economies grapple with significant, albeit moderating, inflation, some regions face far more severe conditions. Countries such as Argentina, Turkey, and Venezuela have experienced hyperinflation, where cumulative price increases have exceeded 100% over just three years, leading to a far more drastic loss of purchasing power for their citizens. As of mid-2025, global inflation trends show signs of easing in many areas, but the cumulative effect of the past five years underscores a challenging economic period for consumers worldwide.