Inflation Trends: A Comparative Study of Developed vs Emerging Markets

Overview

The world is gradually deflationary trend, but the pace and degree to which this change will be occurring differs greatly between the advanced (developed) and the emerging/developing markets. According to the projections of the International Monetary Fund (IMF), the world will have its headline inflation reduced by about 6.7% in the year 2023 and to 5.8% in the year 2024 and to about 4.3% in the year 2025 (Source: Anadolu Agency). That, in that, the advanced economies will stabilize at close to +2% by 2025, but the emerging and developing economies (EMDEs) will remain high, i.e., down to approximately 5.9% by 2025, but, nonetheless, still, above the normal advanced-economy levels (Source: Anadolu Agency). Meanwhile, in the example of the group of developed economies in the form of the Organisation for Economic Co operation and Development (OECD) we find that in March 2025, the headline inflation came to 4.2% which is lower than before OECD.

Hence, the headline story is: Prices remain high, yet higher in emerging markets; developed economies are nearer to their inflation rates.

Trends and Dynamics of Developed (Advanced) Economies.

Data

* OECD also reports annual CPI inflation in its member nations as 4.2% in March 2025, compared to 4.5 in February 2025. OECD

* Core inflation (excluding food and energy) in OECD is expected to be approximately 4.5% in March 2025. OECD

* The projection is that in the developed economies (as of June 2025 of the United Nations report, this is actually read as developed economies, however), inflation is expected to run about at 2.8% in 2025, slightly higher than it was in 2024, according to the data provided in the report of the United Nations Department of Economic and Social Affairs. United Nations

Key Drivers & Features

• Numerous developed economies experienced significant inflation shocks in the wake of COVID as a result of supply chain shocks, energy price inflation, and high demand.
• Part of what is making the headline inflation moderate is due to a decline in energy and commodity prices, diminishing base effects, and tightening by the central-bank. To illustrate, the OECD energy inflation was reduced in March 2025 to 3.0% as compared to 3.8% in February. OECD
• However core inflation (underlying inflation) is also stubborn in most instances particularly services and labour-intensive sectors. According to the OECD prognosis interim economic situation, the underlying inflation will continue to rise, above the central bank targets, in most advanced economies by 2026. OECD
• Policy responses Central banks in most advanced economies have already started to increase interest rates sharply; the problem is now one of how to slow the economy without sparking a sharp economic recession.

Implications

The headline inflation has improved but the rates of approximately 4% (compared to the target of 2%) demonstrate that the risks still exist. The real-income and cost pressures are facing consumers and firms, and policy makers are trying to anchor the expectations and normalize the inflation in a sustainable manner.

Emerging & Developing Economies (EMDEs): Trends and Dynamics

Data

• IMF estimates: EMDE inflation was ~8.1% in 2023, ~7.9 % in 2024, ~5.9 % in 2025. (Source: Anadolu Agency)
• In certain markets: as an illustration, the inflation in emerging and developing Europe was estimated at around 17.1% last year and now is estimated around 16.9% and is more likely to hit 11.1% in the year 2025. (Source: Anadolu Agency)
• According to the UN, the average inflation rate in the developing economies (that overlap with EMDEs) is estimated to be about 4.7% in 2025 United Nations. (This is less than the IMF figure, which is inclusive of classification differences.) (Note: IMF, OECD and UN adopt different country groupings and methodologies; minor numerical differences between these sources are to be expected)
• Some country-specific statistics: e.g. in emerging economies, such as India, Brazil, etc. the rate of inflation has been high in comparison with the developed ones, but the growth rate has been decelerated. McKinsey & Company

Case Study: India

The trend of inflation has been specially encouraging in recent months in the case of India. CPI-based retail inflation decreased to 3.34% in March 2025, which is the lowest level in almost six years (fipi.org.in, The Times of India, Press Information Bureau). One of the big items on the CPI basket of India food inflation declined to 2.69% in March (Business Standard Media). According to provision data on Ministry of Statistics & Program Implementation (mospi.gov.in), in April 2025 the headline CPI further softened to 3.16%. In the meantime, inflation is predicted to be 4.8 % on average on the FY 2024–25, and even decreasing to approximately 4% on FY 2025–26 (The Times of India, Business Standard). This relative stability in inflation has given the Reserve Bank of India (RBI) increased space in which it can think of easing its policy, but there are also upside risks – in particular, adverse weather or crop disruptions, food-price volatility, monsoon uncertainty, and world commodity pressures.

Key Drivers & Features

Inflation volatility in the emerging markets is usually enhanced by:

* depreciation of currencies and pass-through of import prices.

* increased exposure to food and energy price shocks.

* reduced anchored inflation expectations and occasionally inferior institutional credibility.

* infrastructure, logistics, agriculture: supply constraints.

There are other emerging areas where the inflation is still in the double figures. To illustrate, IMF observes that in parts of the emerging and developing Europe, the MENA, sub-Saharan Africa regions will continue to experience inflation in the double-digit territory by the year 2025. (Source: Anadolu Agency)

On policy front: In spite of the fact that most of the emerging economies have been able to improve their structures (inflation targeting, central bank independence, fiscal discipline), they still have less buffer when compared to the advanced economies.

Implications

The fact that inflation rates are relatively greater in EMDEs implies that real-income pressure is severe, particularly whereby households with large household income proportions use it on necessities. A continued high inflation may deter investment and make fiscal control difficult. Policymakers face sharper trade-offs: tightening risks slowing growth, while easing too quickly risks reigniting inflation.

Feature	Developed Economies	Emerging/Developing Economies
Current headline inflation (approx.)	~4.0-4.5 % (OECD average) (OECD)	~5.9 % forecast for 2025 (IMF) (Source: Anadolu Agency)
Rate of decline	Gradual; underlying inflation still sticky.	Decline underway but from higher base; some regions remain in double digits.
Core inflation pressure	Significant, especially services.	Strong, often driven by food/energy and weaker structural buffers.
Policy flexibility	Greater: stronger institutions, deeper markets.	Less: weaker buffers, more external vulnerability (currency, commodity shocks).
Risk of inflation-shock resurgence	Moderate: risks from wage-price loops, services inflation.	Higher: currency pressures, food/energy shocks, expectations unanchored.
Implication for growth	Tighter policy but manageable; inflation closer to target.	Trade-off sharper: need to suppress inflation but risk derailing growth.

Key Takeaways & Outlook

1. It is convergence tendency, yet divergence.

Both developed and emerging markets are moving in the right direction by having a declining trend in inflation but the gap between them is significant. The developed economies are nearer their goals (~2 %), and several of emerging economies will not be no less than that in 2025, notwithstanding any improvement.

2. Formal differences are important.

It is not merely a cyclical difference. Structural obstacles to growth (food/energy volatility, weaker institutions, currency exposure) continue to raise and make inflation more volatile in emerging markets.

3. Emerging markets are quite complex in policy-making.

Central banks of advanced economies are more credible, financial markets are more developed with more policy space. In the new markets, the timing and calibration of tightening are of more importance not to cause growth fractures.

4. Risks are still on the upside

These two groups have upside inflation risks:

• in developed economies: endemic services inflation, wage pressures, and constraints of the supply side. OECD indicates that underlying inflation is above target in most advanced economies. OECD
• in case of emerging markets: currency depreciation, food/energy supply shocks, fiscal slippages can all become the engines of inflation again. As an illustration, there are still areas that are projected at doubling digits. (Source: Anadolu Agency)

5. Investment implications / economic implications:

• To the consumers: in the developed economies, the moderate rate of inflation is a good news, but the high rate continues to pressuring purchasing power. The increased inflation cost may greatly reduce real incomes particularly among low-income households in emerging markets.
• Cost pressures to businesses: it is still good to plan against inflation.
• To investors: inflation differentials are important to real returns, interest-rate policy, currency flows. There is a risk that emerging-market inflation will be converted into currency risk or increased interest-rate risk.

6. Opinion leans slightly favorable and conservative.

The trend is downward – IMF and UN projections are indicating further eased. But the path is uneven. Developed economies are likely to stabilize on their objectives in 2025-26; in the case of emerging economies the same may take more time and by region. The policymakers should be on alert. Indicatively, the UN note: “Three-quarters of the developing economies will still have rates higher than the pre-pandemic rates. United Nations

Conclusion

In the year 2025, inflation continues to be a characteristic problem in the world. Economies of the first world are nearly reaching their goals yet the emerging economies with all their significant levels of gains continue to experience high prices and even greater trade-offs. The case of India with its acute disinflation is an excellent example of how a focused monetary policy and food price subsidies can work, but the larger emerging markets are still facing structural inflationary forces.

The future outlook is tentatively positive: the rates of inflation are lower, yet the stability is not achieved yet. Constant vigilance, plausible policy frameworks, and reforms in the supply side is necessary in order to achieve sustainable price stability whether in advanced or emerging economies.

Sources:

Primary Sources

1. International Monetary Fund (IMF)

• World Economic Outlook (October 2025 & April 2024 updates)
  Used for global and regional inflation forecasts:
  • Global inflation: 6.7 % (2023) → 5.8 % (2024) → 4.3 % (2025).
  • Emerging & Developing Economies: 8.1 % (2023) → 7.9 % (2024) → 5.9 % (2025).
  • Advanced Economies: trending toward 2 % by 2025.
    🔗 https://www.imf.org/en/Publications/WEO

2. Organisation for Economic Co-operation and Development (OECD)

• Consumer Prices – OECD Statistical Release (May & November 2025)
  Provided data for developed economies (OECD average inflation ~4.2 % in 2025).
  🔗 https://www.oecd-ilibrary.org/en/data/insights/statistical-releases
• OECD Economic Outlook Interim Report (March 2025)
  Source for commentary on “sticky” core inflation and medium-term projections.
  🔗 https://www.oecd-ilibrary.org/en/publications

3. United Nations – Department of Economic and Social Affairs (UN DESA)

• World Economic Situation and Prospects: June 2025 Briefing No. 190
  Used for inflation averages in developed (2.8 %) and developing economies (4.7 %), and note that “three-quarters of developing economies remain above pre-pandemic levels.”
  🔗 https://www.un.org/development/desa/dpad/publication/world-economic-situation-and-prospects-june-2025-briefing-no-190

India-Specific Data Sources

4. Ministry of Statistics and Programme Implementation (MOSPI)

• Consumer Price Index (CPI) Press Release – May 2025
  Provided the April 2025 CPI figure (3.16 %).
  🔗 https://mospi.gov.in

5. Press Information Bureau (PIB), Government of India

• Used for official communications confirming CPI data trends and commentary on moderation.
  🔗 https://pib.gov.in

6. Financial Express (India)

• “May CPI inflation drops to 2.82 %, lowest since February 2019” (June 2025).
  Latest available figure used for mid-2025 updates.
  🔗 https://www.financialexpress.com

7. The Times of India

• “India’s retail inflation logs 3.34 % in March 2025, nearly 6-year low.”
• “RBI hikes FY25 inflation estimate to 4.8% amid food price concerns.”
  🔗 https://timesofindia.indiatimes.com

8. Business Standard Media

• Confirmed food inflation at 2.69 % in March 2025 and RBI inflation expectations.
  🔗 https://www.business-standard.com

9. Federation of Indian Petroleum Industry (FIPI)

• Supplemental source for macro-economic monitoring and CPI validation.
  🔗 https://fipi.org.in

Regional and Analytical References

10. McKinsey & Company – Global Economics Intelligence

• Used for context on inflation and growth patterns across emerging markets (e.g., Brazil, South Africa, Indonesia).
  🔗 https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/global-economics-intelligence

11. Anadolu Agency (AA.com.tr)

• IMF estimates and commentary on emerging-market inflation remaining in double digits.
  🔗 https://www.aa.com.tr/en/economy

Disclaimer

This report is intended for informational and academic purposes only. The analysis is based on publicly available data from reputable sources including the IMF, OECD, UN DESA, MOSPI, and major news outlets. While every effort has been made to ensure accuracy, economic data and forecasts are frequently revised by official agencies.

Nothing in this report should be interpreted as financial advice, investment guidance, or policy recommendations. Readers should verify all figures with the latest official releases before making any financial, business, or policy decisions. The author and publisher assume no responsibility for actions taken based on this content.