Global Inflation Continues to Decline with Structural Divergence, Rate Environment Improves

Global Inflation Continues to Decline

In 2025, global inflation continues its downward trend from the 2023 peak. US CPI has fallen to around 2.5%, approaching the Fed 2% target. Eurozone inflation has dropped to 2.8% but core inflation remains sticky. Major Asian economies show moderate inflation.

Structural Inflation Divergence Intensifies

Despite declining overall inflation, structural divergence has intensified. Services sector inflation pressure remains higher than goods, and housing costs continue to contribute disproportionately to US CPI.

Declining Real Rates Drive Asset Repricing

Under the combined effect of declining nominal rates and stable inflation expectations, real interest rates are trending downward, driving broad asset repricing.