G10 Inflation Monitor Core Inflation Surprises to the Downside Outside of the UK

Economics Research 30 July 2026 | 2:33AM BST

Core Inflation Surprises to the Downside Outside of the UK

GS trimmed core inflation: Megan Peters | n Our June sequential trimmed core inflation measures ticked down in the Euro Goldman Sachs International

area (1.1% vs. 2.6%) and the US (1.7%, GS forecast for PCE, vs. 2.1%), moved sideways in Canada (1.8%), and ticked up in Japan (2.2% vs. 1.6%) and the UK (2.2% vs. 1.8%). n On a 3-month annualized basis, our trimmed core measures declined in the US (PCE, 1.9% vs. 2.3%), moved sideways in the Euro area (2.2%) and Canada (1.8%) and increased in Japan (1.3% vs. 1.1%) and the UK (1.7% vs. 1.5%). n The weighted median month-over-month core inflation rate edged up in Canada but declined elsewhere.

n The share of the headline basket running above 4% on a six-month annualized basis ticked down in the US (31%, GS forecast for PCE, vs. 34%) and moved sideways in the Euro area (23%) but ticked up in Japan (29% vs. 18%), the UK (36% vs. 32%) and Canada (22% vs. 19%). The share of the headline basket running above 8% continued to edge up in the US (16% vs. 15%) but remains close to pre-pandemic averages elsewhere. n The distribution of three-month inflation rates across items in the core basket is skewed higher in the US (where large price increases have grown more common again after having moderated prior to 2025) and the Euro area. In the UK, the distribution shifted sharply lower since April, reflecting smaller regulated price resets and calendar effects. The distribution remains skewed towards lower inflation rates in Canada due to softer shelter inflation.

n On a 3-month annualized basis, core goods inflation slowed in the US (CPI, -0.7% vs. 0.1%) but ticked up elsewhere to 3.2% in Canada (vs. 1.8%), 1.9% in Japan (vs. 1.2%), 1.8% in the UK (vs. 0.2%) and 1.0% in the Euro area (vs. 0.9%). Core services inflation slowed in the US (3.4% vs. 4.2%), Japan (-0.2% vs. 0.4%) and UK (2.3% vs. 2.5%), moved sideways in the Euro area (3.5%) and ticked up from low levels in Canada (2.0% vs. 0.7%), partly driven by World Cup-related categories such as travel services.

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to

Goldman Sachs G10 Inflation Monitor

n On a 3-month annualized basis, rent inflation slowed in Canada (2.0% vs. 2.7%), the UK (3.7% vs. 4.0%), the US (4.3% vs. 4.5%) and Japan (0.5% vs. 0.7%) but edged up in the Euro area (2.9% vs. 2.8%). n On a 3-month annualized basis, energy inflation pulled back sharply in June on the back of the US-Iran deal to reopen the Strait of Hormuz to 7% in the US (vs. 104%), 11% in Canada (vs. 102%), 3% in the Euro area (vs. 44%), 6% in the UK (vs. 31%) and 19% in Japan (vs. 41%). Food inflation slowed in Canada (1.8% vs. 4.3%), the UK (-1.2% vs. 0.7%) and the Euro area (-0.7% vs. 0.4%) but ticked up in Japan (2.6% vs. 1.6%) and the US (3.5% vs. 2.6%).

n In June, year-over-year core inflation surprised to the downside in the US (reflecting broad-based declines across categories), the Euro area (reflecting softer-than-expected services inflation), Canada (reflecting slowdowns in almost all major categories) and Japan (driven in part by a slowdown in mobile phone communication fees). Core inflation was in line with expectations in the UK, although headline inflation surprised slightly to the downside. n Our aggregate indices of DM inflation surprises ticked down to -23bp for headline inflation in July (vs. -1bp at the end of June) and -13bp for core inflation (vs. +2bp). Over the last 12 months, headline and core inflation have both surprised to the downside outside of the Euro area, with the largest cumulative surprises in Canada (-80bp), the UK (-43bp) and the US (-31bp).

n On a Q4/Q4 basis, we forecast that year-over-year core inflation will accelerate to 2.8% by end-2026 in the UK, 2.6% in the Euro area, 2.5% in Japan, and 2.0% in Canada. We expect core PCE inflation to slow in the US to 3.0%, reflecting continued disinflationary impulses from shelter inflation and a fading boost from tariffs and software, which offset…