We estimate global core inflation at 2.2% MoM saar in December 2024, with the underlying trend at 2.5% and moving up. Of this, 0.4% comes from a common component, while 2.1% is driven by country-specific factors.
Both the common and country-specific components of core inflation have eased but remain above pre-Covid levels. In most countries, the core CPI trend is still above target. In some cases—particularly Belgium, the Netherlands, the U.K., and the U.S.—the country-specific trend is either above target or higher than pre-Covid. However, Denmark and Sweden stand out as exceptions, where the country-specific trend is now below pre-Covid levels.
Finally, we estimate global headline inflation at 4.5% MoM saar in December, with its trend at 4.3%.
For country-specific results, you can download a PPT with all the charts here.
An Excel file containing the data of all charts (global and each of the 18 countries) can be downloaded here.
What the model does
Our approach is based on Stock and Watson’s (2016) “Core Inflation and Trend Inflation” as well as the NY Fed’s Multivariate Core Trend Inflation model. Specifically, we model the monthly inflation rate for 18 countries as the sum of a persistent and a transitory component.
Both components are further broken down into common and country-specific subcomponents. We define global trend inflation as the weighted aggregate of the persistent components (both common and country-specific) across these countries, with weights determined by each country’s share of personal consumption expenditures.
Results
Global core CPI remains above target, with its trend edging higher. We estimate that global core CPI inflation reached 2.2% MoM saar in December (Figure 1). The underlying trend rose to 2.5% (Figure 2), with 0.4% driven by a common global factor and 2.1% attributed to country-specific influences.
The key takeaway is clear: while global core CPI inflation has moderated, it remains above the 2% target. The rise in core CPI across countries has been fueled by both common shocks—such as global supply chain disruptions, which were negligible before Covid—and country-specific shocks, including fiscal policy, which accounts for roughly one-third of the overall increase in core inflation.
Figure 1. Global core CPI (MoM saar) and its trend
Note: The figure shows the estimated global core CPI MoM saar (black dotted line) along with its trend (solid blue line and bands).
Figure 2. Global core CPI trend and its contributions: common vs country-specific components
Note: The figure displays the estimated trend of global core CPI (black line) along with its components—the common factor across countries (yellow line) and the country-specific contribution (blue line).