Conflicts Around the World Continue. Economists Are Seeing High Inflation Lasting Into 2027 as Energy Costs Spread.
High inflation is likely to persist across much of the global economy well into 2027, according to a new specialized poll, as rising energy costs threaten to fuel broader and more lasting price increases.
Economists surveyed by Reuters in October raised their inflation forecasts for next year in 31 of the 50 economies covered, including 15 of 21 developed economies. They also raised growth projections for 23 economies, suggesting that persistent inflation could coincide with stronger economic activity than previously expected.
The findings point to a shift from Reuters polls in April and July, which had painted a picture of high inflation accompanied by weaker growth. Investment in artificial intelligence and stronger-than-expected activity in several regions have helped support the economy, even as households continue to struggle with the cost of living.
That resilience is also contributing to concerns that price pressures could prove difficult to contain. “I am getting much more concerned about inflation again,” Janet Henry, global chief economist at HSBC, told the outlet.
Henry said the longer the conflict in the Middle East continues and escalates, and the more price pressures spread, the greater the likelihood that inflation will remain elevated for longer.
Oil has been a major source of pressure. Crude prices have remained above $100 a barrel since October 7 and rose above $117 last week, reaching a six-month high. Prices have climbed more than 60% since the war with Iran began nearly eight months ago.
Seth Carpenter, global chief economist at Morgan Stanley, said in a note that higher energy prices continue to ripple through the global economy. He added that signs were beginning to emerge that energy costs were passing through to measures of core inflation, which generally exclude volatile food and energy prices.
Over the past three quarterly Reuters polls, economists have raised their median 2027 inflation forecasts by a cumulative 0.7 percentage points for Britain, 0.5 points for the eurozone and 0.2 points for the United States. The forecast rose by 0.4 points for India and 0.5 points for Brazil.
Most central banks have raised interest rates only a few times or have held them steady. Further increases could follow if inflation spreads more widely, potentially keeping borrowing costs higher for households and businesses.
A sell-off in global bond markets in recent months has already pushed yields higher, tightening financial conditions. Higher bond yields can influence the cost of borrowing across the economy.
Despite the inflation concerns, economists have become more optimistic about growth. They now expect the global economy to expand 3% in 2026 and 3.2% in 2027, up from respective forecasts of 2.9% and 3.1% in the July poll. The 2027 projection remains below the International Monetary Fund’s forecast of 3.4%.
