What's happened
Recent data shows mixed inflation signals across major economies. Japan's core CPI rose for the 53rd month, driven by food and energy prices. Meanwhile, UK shop prices and US producer prices indicate ongoing inflation pressures, despite forecasts of easing. The economic outlook remains uncertain.
What's behind the headline?
Persistent Inflation Signals
- Japan's core CPI has risen for 53 consecutive months, driven by food and energy prices, indicating entrenched inflation.
- UK shop prices increased by 1.5% in January, with food inflation reaching 3.9%, the highest since October, driven by energy costs and policy impacts.
- The UK’s inflation remains above the Bank of England’s target, with supply pressures and policy hikes contributing.
- US producer prices rose 3% year-on-year in December, with services prices also climbing, suggesting inflation is still building upstream.
Underlying Drivers
- Energy prices, especially in the UK and Japan, continue to influence inflation, with energy costs falling in some areas but remaining high in others.
- Policy measures, such as increased taxes and energy levies, are adding to inflationary pressures.
- Supply chain disruptions and demand surges during holiday periods are also contributing.
Outlook
- Inflation is likely to remain sticky in the near term, with some easing expected from mid-2026 as policy effects and base effects take hold.
- Central banks will need to balance tightening measures with economic growth risks.
- The divergence in inflation trends across regions underscores the complexity of global economic recovery.
Implications for Consumers
- Consumers face ongoing price pressures, especially in food and energy sectors.
- Policymakers will need to navigate inflation control without stifling growth, which remains a delicate balancing act.
What the papers say
The Japan Times reports Japan's core CPI has risen for 53 months, driven by food and energy prices, with food prices climbing 5.6% and rice prices up 26%. AP News highlights US producer prices increased 3% in December, with services up 0.7%, indicating ongoing upstream inflation. Reuters notes UK shop prices rose 1.5% in January, with food inflation at 3.9%, driven by energy costs and policy hikes, while The Guardian emphasizes retailers blame energy bills and increased National Insurance contributions for rising food prices. The Independent discusses how inflation remains above forecasts, driven by demand and policy impacts, with experts expecting a gradual decline later in 2026.
How we got here
Inflation has been a key concern globally, influenced by supply chain disruptions, policy changes, and energy prices. Japan's long-standing inflation trend reflects domestic demand and energy costs. The UK and US have experienced inflationary pressures from policy adjustments, energy costs, and supply chain issues, with recent data showing signs of persistence rather than easing.
Go deeper
- How are central banks responding to these inflation signals?
- What impact will this have on household costs and savings?
- Are there regional differences in inflation that could affect policy?
More on these topics
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The British Retail Consortium is a trade association in the United Kingdom.
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Helen Dickinson OBE is a British accountant and executive, and the current Chief Executive Officer of the British Retail Consortium, a post she has held since January 2013.
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A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.