When the US CPI hit 9.1% in June 2022, euro-area HICP reached 10.6% in October, and UK CPI peaked at 11.1% the same month, inflation had not been this high in advanced economies since the 1970s. By November 2026, all three are below 3.5% — a dramatic and faster-than-expected decline. But the last mile is proving harder than the first nine.
The anatomy of disinflation
Disinflation — inflation falling but remaining positive — works in phases. The first phase (roughly mid-2022 to mid-2023) was driven by energy price reversals. Oil and gas prices that had spiked after Russia's invasion of Ukraine fell as European countries diversified supply and mild winters reduced demand. This phase of disinflation was fast and largely mechanical. The IEA World Energy Outlook provides the energy backdrop.
The second phase (mid-2023 to mid-2024) saw goods inflation collapse: supply chains normalised, inventories rebuilt, and the post-pandemic demand surge for goods faded. Base effects helped further — comparing 2023 prices against the elevated 2022 base produced lower year-on-year rates mechanically. The World Bank Commodity Markets Outlook tracks the commodity price normalisation.
The third phase — the one underway now — is services disinflation. Services prices are driven by wages, rents, and domestic demand. They do not respond to falling oil prices or easing supply chains. This is why ECB economists and the Bank of England's November 2026 Monetary Policy Report both describe services inflation as the "final obstacle" to returning to target.
Comparing the three economies
The US entered the disinflation process with a higher peak (9.1%) but started earlier. Euro area inflation peaked later and remained above US levels through 2023 partly due to the direct energy shock from the Ukraine war, which was more severe for European importers. The IMF WEO projects all three to be at or below 2.5% by end-2027, but flags services persistence as the main downside risk to that projection.