Inflationary pressures continue to subside compared to the previous two years as improved supply chains and tight monetary policy slow demand.

Global inflation rises to 6.4% in 2024 due to a large revision for Argentina but sits at 4.5% with that market excluded. Further deceleration is expected in 2025 with inflation dropping to 3.7% next year based on the latest Euromonitor forecasts.

Several challenges could reverse the disinflation trend, which creates an uncertain outlook. Geopolitical tensions are a major upside risk given trade disruptions and commodity price volatility. Any potential escalation of the Israel-Hamas war to the wider region would result in upward pressures on global oil prices. Shipping disruptions in the Red Sea could hamper certain supply chains. And the war in Ukraine continues to pose a threat to the global supply of energy and food.

Inflationary pressures could also increase on the back of ongoing labour shortages, lack of housing supply and geoeconomic fragmentation, among other factors.