Global inflation has almost halved since September last year and this trend has further to run. Admittedly, the fall in headline inflation so far mainly reflects the drag from lower energy price inflation, which has almost run its course. But we think that lower core inflation will do more of the heavy lifting in getting overall inflation back to central bank targets in the years ahead. Indeed, there are signs that a continued moderation in core goods inflation is already in the pipeline. And monetary tightening should deliver subdued growth in EMs and mild recessions in DMs, which should bear down on services inflation too. Tight labour markets and unusually strong corporate pricing power mean that the near-term risks to the inflation outlook probably tilt to the upside, particularly in Europe. But our central view is that core inflation in advanced economies will generally fall close to 2% by the end of next year.
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