Inflation has proved somewhat stickier than we had anticipated, but the outlook of lacklustre growth, softening labour markets, normalising supply conditions and falling energy costs is consistent with further falls to come. Tariffs are a fly in the ointment, but while they will cause a temporary rise in inflation in the US, we expect limited retaliation to mean that the effects are small elsewhere. Most notably, this will mean a renewed divergence between inflation trends in the euro-zone and the US. We have added a new Tariffs page to this edition of the Global Inflation Watch, which we will refresh with each quarterly publication unless or until they become less relevant to the inflation outlook.
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