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Underlying price pressures are still rising in most major advanced economies, despite a recent decline in headline inflation, suggesting that central banks should continue to tighten policy in the coming months.

Core inflation, which excludes changes in food and energy prices and is seen by interest rate setters as a better measure of continued price pressures, is accelerating in many parts of the world, according to an analysis of official FT statistics.

Key interest rates were still rising in November in most of the 33 countries tracked by the FT and remain well above the 2 per cent inflation target for most central banks.

The proportion of countries with rising core inflation has started to narrow in recent months, but it remains much more prevalent than headline inflation. Only a third of countries saw overall rate increases between October and November.

“There is still the potential for a lot of pain ahead,” said Suzanne Streeter, investment analyst at asset manager Hargreaves Lansdown. “Persistently high prices continue to cause severe headaches for economies.”

Services inflation, another measure of the stickiness of price pressures, remains near multi-decade highs in several major economies, including the UK, the eurozone and the US.

Policymakers have raised interest rates aggressively this year in response to rising headline inflation, but have recently begun to scale back the rate of increases.

Last week, the Federal Reserve, the European Central Bank and the Bank of England all decided to change their inflation-fighting strategy from the latest example of a 0.75 percentage point rate hike to half a point in response to an apparent peak in headline inflation across the country. many countries.

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ECB President Christine Lagarde said monetary tightening in the euro zone “still has a way to go” and that rate-setters plan to continue raising borrowing costs by 50 basis points in the coming months.

Lagarde also acknowledged that underlying price pressures have intensified and “will persist for some time,” a message echoed by Fed Chair Jay Powell and BoE Governor Andrew Bailey.

Rising energy and commodity prices, a result of the war in Ukraine and severe supply chain disruptions during the pandemic, drove the initial surge.

However, rising costs have since become more widespread as high inflation has been recorded in pockets of the economy that have for many years proved immune to price pressures. Wage growth, which has been subdued in most of the world’s major economies since the global financial crisis, has also picked up, particularly in the US.

Now, with commodity prices stabilizing, headline inflation has fallen sharply in a number of economies, including the US, UK and eurozone countries.

Core inflation measures did not follow suit. Core inflation, the most widely used gauge of longer-term price pressures, remains at an all-time record high in the eurozone at 5 percent.

Silvia Ardagna, chief European economist at Barclays Bank, said ECB policymakers “will be concerned that we do not see a weakening of inflation dynamics at the core level.”

U.S. services inflation is still at a 40-year high, despite a two-percentage-point drop in headline inflation since the summer.

“Services inflation will be crucial in determining the policy rate path,” said Ben May, director of global macro research at Oxford Economics.

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Last week, Fed policymakers acknowledged that core inflation will be stickier than previously thought, revising their estimate for next year to 3.5 percent from 3.1 percent forecast in September.

UK services inflation also remained high, hitting a 20-year high in November, despite the headline reading easing to 10.7 per cent from 11.1 per cent in October. The BoE said continued services inflation “justifies a further strong monetary policy response”.

“Developed market central banks still have more to do,” said Jennifer McKeown, chief global economist at Capital Economics.

“Inflation may have peaked, but that doesn’t mean it’s all smooth sailing down here.”

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