Central banks are winning the battle against inflation. But the war is just getting started

The data do indeed merit some satisfaction. After cumulative price increases between 2021 and 2023 of 15% in America and 18% in the euro zone, annual inflation rates now stand at just 2.6% and 2.5% respectively. Yet the time for mutual back-patting may be brief. Lower inflation, though welcome, does not mean a return to the relatively stable economy that prevailed before the pandemic. Several perils loom on the supply side, which could constrain growth and boost inflation, just as a return to populism in America and Europe threatens fiscal blowouts and more price pressure still. Central bankers may be winning the battle against inflation. The war is just beginning.