G7 Consumer Price Inflation

Key observations

• The 2022 inflation shock was synchronised but uneven: all G7 nations hit multi-decade highs, but the UK peaked highest (9.1% in 2022), partly due to energy exposure and the sterling depreciation. Germany also hit 8.7%, reflecting its dependence on Russian gas.
• France was relatively sheltered in 2022 (5.9%), partly thanks to regulated energy tariffs that spread price rises across a longer window — but this delayed rather than avoided the pain.
• Japan is the outlier: it ran below zero or near-zero inflation from 2016 to 2020, defying the global norm. Its 2022–23 inflation (2.5–3.3%) was described as the end of deflation — a structural shift the Bank of Japan had sought for decades.
• Italy ran deflation in 2016 and 2020, reflecting persistent demand weakness. Its 8.7% spike in 2022 was dramatic — and the subsequent fall back to 1.1% by 2024 was the fastest disinflation in the G7.
• All G7 countries are converging toward their 2% central-bank targets by 2024–25, though the path was painful and the cumulative price level increase since 2020 remains large in absolute terms.
• The 2016–2019 baseline period was one of remarkable price stability across the G7, with most countries running 1–2% inflation effortlessly — a contrast that makes the 2021–23 surge all the more striking.