Global | Inflation moderates slowly

Summary

In recent months, inflation has shown signs of moderation in most countries, both developed and emerging, but there is still a ways to go before it reaches pre-pandemic levels.

Key points

• Key points:
• Both in the eurozone and in the U.S. prices have begun to ease,after reaching alarming numbers in the second and third quarters of last year.
• This reduction in headline inflation has been driven mainly by lower prices in energy and goods. The latter has been facilitated by the normalization of supply chains post-pandemic.
• In fact, BBVA Research's bottleneck indicator is now at levels comparable to those observed prior to the COVID-19 outbreak in 2020.
• Despite this decrease in headline inflation, core inflation—which excludes the most volatile prices (food and energy)—is moderating at a slower pace due to the more muted slowdown in the price of services.
• Both in the U.S. and in Europe, inflation spikes are behind us. In the eurozone, however, the headline inflation rate has seen a more pronounced drop over a shorter period of time, aided by lower gas prices.

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