Economists expect high inflation to persist into 2027 as energy costs rise

Reuters poll finds inflation forecasts raised for 31 of 50 economies, with oil prices above $100 a barrel since October

High inflation is expected to continue across much of the global economy into 2027, according to a Reuters poll of economists conducted in October. The survey found that inflation forecasts for the coming year were raised in 31 of the 50 economies covered, including 15 of 21 developed economies, as energy costs remain elevated and price pressures spread.

The Reuters poll also indicated that growth projections were increased for 23 economies, suggesting that persistent inflation could coincide with stronger economic activity than previously anticipated. This marks a shift from earlier Reuters surveys in April and July, which had depicted a scenario of high inflation alongside weaker growth.

Investment in artificial intelligence (AI) and unexpectedly robust activity in several regions have contributed to economic resilience, even as households continue to face challenges from the rising cost of living. This resilience, however, has raised concerns among some economists that inflationary pressures may be more difficult to contain than previously thought.

“I am getting much more concerned about inflation again,” Janet Henry, global chief economist at HSBC, told Reuters. She added that the longer the conflict in the Middle East continues and escalates, and as price pressures become more widespread, the greater the likelihood that inflation will stay elevated for an extended period.

Oil prices have been a significant driver of inflationary pressure. Crude oil has remained above $100 a barrel since 7 October and climbed above $117 last week, reaching a six-month high. According to the report, oil prices have increased by more than 60% since the war with Iran began nearly eight months ago.

The findings highlight the ongoing impact of geopolitical conflicts on global energy markets and inflation trends. As the situation develops, economists and policymakers will continue to monitor the interplay between energy costs, economic growth, and inflation expectations.

Source: https://www.ibtimes.com/conflicts-around-world-continue-economists-are-seeing-high-inflation-lasting-2027-energy-costs-3809055