Coordinated disinflation

2023H2 saw inflation collapse across the US, UK and Eurozone

THE DISINFLATION across major economies in the second half of 2023 was remarkable. Since looking at countries in isolation makes it possible to miss the coordinated nature of this adjustment it worth underlining what happened.

Consider the US, UK and Eurozone.

Pre-pandemic seasonality

Begin with the typical pre-pandemic, non-seasonally adjusted pattern for Core inflation (the median of 2015-19). The experience in the UK and EZ shows far greater seasonality in inflation than in the US, with core inflation falling sharply in a typical January as well as July, with inflation picking up during the other months.