Global Inflation Trends Shows A Gradual but Uneven Cooldown

Global inflation continued to moderate in 2025, extending the disinflation trend that followed the post-pandemic price surge. Average global headline inflation declined to an estimated 3.4% in 2025, down from 4.0% in 2024, and is projected to slow further to 3.1% in 2026. This easing reflects a combination of lower international energy and food prices, reduced currency depreciation pressures in many developing economies, and slower nominal wage growth. This is particularly true across advanced markets.

Despite this progress, disinflation remains uneven. By 2025, inflation in approximately 40% of countries had returned to their long-term (2010-2019) averages, yet progress toward central bank targets has been slower than anticipated in several economies.

Key Risks to the Disinflation Outlook

While inflation is expected to continue easing, several downside risks persist. Renewed geopolitical tensions could drive energy prices higher, while supply chain disruptions and adverse weather conditions may constrain agricultural output and push food prices upward. These factors could complicate monetary policy normalization and delay a full return to price stability in vulnerable regions.

Developed Economies: Sticky Services Inflation

In developed economies, average inflation is estimated at 2.7% in 2025, broadly unchanged from 2024, and is projected to ease to 2.4% in 2026, nearing pre-pandemic norms. However, core inflation remains elevated in several countries, driven by persistent price pressures in services such as housing, healthcare, and insurance. Food inflation also re-accelerated in 2025, reflecting higher dairy and meat prices.

In the United States, inflation is estimated at 2.9% in 2025 and projected at 2.7% in 2026. While headline inflation has remained contained, tariff pass-through has increasingly affected prices for durable goods. In the euro area, inflation hovered close to the European Central Bank’s 2% target in 2025 and is expected to dip slightly below in 2026. The United Kingdom continues to face elevated inflation, while Japan saw higher inflation in 2025, largely driven by food prices.

Developing Regions: Diverging Inflation Paths

Inflation trends across developing economies are more mixed. Average inflation is projected to moderate from 4.2% in 2025 to 3.9% in 2026, supported by easing currency pressures and lower commodity prices. Inflation is expected to return to or remain close to pre-pandemic averages in South Asia and Latin America, but is projected to stay elevated in Africa and Western Asia, reflecting conflict, climate shocks, and logistical constraints.

In East Asia, inflation remains subdued, with rising deflation risks in economies such as China and Thailand. Encouragingly, the share of countries experiencing double- or triple-digit inflation declined from 24% in 2024 to 18% in 2025, with further improvement expected in 2026.

Progress with Persistent Regional Gaps

Overall, global disinflation is firmly underway, but the path back to price stability remains uneven. Structural pressures, geopolitical risks, and region-specific vulnerabilities continue to shape inflation dynamics, underscoring the need for cautious and flexible policy responses in the year ahead.