Navigating through an inflationary world

While inflation has eased from its recent highs, it continues to be a pressing concern for households, businesses and policymakers. UN DESA’s latest Monthly Briefing on the World Economic Situation and Prospects analyses current inflation trends, explores the evolving drivers behind price pressures, and discusses policy priorities to address the complex inflation landscape.

The current inflation landscape and outlook

Global headline inflation declined from 5.6 per cent in 2023 to 4 per cent in 2024, reflecting easing food and energy prices and the effects of monetary tightening. However, inflationary pressures have remained broad-based and stickier-than-expected. 

As of early 2025, annual inflation still exceeded pre-pandemic averages in about 65 per cent of all countries. Core inflation remains stubborn in many developed economies, driven by persistent services inflation and strong wage dynamics, while food prices continue to rise rapidly in many developing economies.

Supply-side shocks have played a key role in shaping inflation dynamics in recent years, notably through the disruptions caused by the COVID-19 pandemic and the war in Ukraine. Looking ahead, rising geopolitical fragmentation, the proliferation of trade barriers, and the growing impacts of climate change will likely trigger further supply-side disruptions—keeping inflation a persistent and pressing global policy challenge.

Responding to inflation

Navigating the current inflation landscape requires a flexible and well-coordinated policy mix. Monetary policy remains central, but its effectiveness can be somewhat limited, particularly amid persistent supply-side shocks. Central banks may need to revisit their frameworks to enhance effectiveness. 

Fiscal policy can also complement these efforts by supporting vulnerable groups and cushioning the impact of high prices. At the same time, structural supply-side measures may become necessary. Targeted investments that strengthen production capacity and improve logistics—especially in food, energy, and transport—are key to building supply resilience and mitigating inflationary pressures.

More information is available in the Monthly Briefing on the World Economic Situation and Prospects.

A more detailed analysis on the state of the global economy will be released on 15 May 2025. Watch the press briefing of the World Economic Situation and Prospects as of mid-2025 live on 15 May at 12:30pm EDT on webtv.un.org.

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