current
Global Disinflation Progressing
Global inflation is declining, but services inflation remains elevated, requiring careful monetary policy calibration.
Timeframe
near-term
Categories
Subcategories
Impact areas
Detailed Analysis
The global battle against inflation is showing positive results, with headline inflation rates projected to fall below pre-pandemic averages by the end of 2025. This disinflation is attributed to easing supply disruptions, normalization in labor markets, and effective monetary policy. However, services price inflation remains a concern, significantly higher than pre-pandemic levels and driven by wage increases as pay catches up with past inflation.
Context Signals
Global headline inflation projected to fall from 6.7% in 2023 to 4.3% in 2025.
Core goods price inflation has declined to zero.
Wage growth exceeding productivity gains in the euro area.
Edge
Central banks may need to implement targeted measures to address persistent services inflation.
The divergence between goods and services inflation could create imbalances in resource allocation.
Successful disinflation could pave the way for a shift in policy focus towards growth and structural reforms.
