Economists polled by Reuters expect high inflation to persist globally well into next year. They are increasingly concerned that price pressures will become entrenched beyond rising energy costs tied to the conflict in the Middle East. At the same time, they raised growth forecasts.
High inflation will persist in the global economy well into next year, according to hundreds of economists polled by Reuters. Their worry is that price pressures could become entrenched beyond energy costs.
More than 500 economists surveyed this month raised their 2027 inflation forecasts for 31 of the 50 economies polled. Forecasts for 15 of 21 developed economies went up as well, which suggests worries are spreading to economies that typically experience low price pressures.
Oil above $100 a barrel
Crude oil prices have stayed above $100 a barrel since October 7. Last week they hit a six-month high of over $117, and they are up more than 60% since the US-Israeli war with Iran began almost eight months ago.
Even forecasters who did not expect a quick end to the war now sound more worried about an inflation resurgence. HSBC global chief economist Janet Henry said, according to Reuters: "I am getting much more concerned about inflation again."
Morgan Stanley's Seth Carpenter noted that signs of energy pass-through into core measures are beginning to emerge.
Forecasts diverge by economy
Over the past three quarterly polls, median 2027 inflation forecasts have risen by 0.7 percentage points for Britain, 0.5 percentage points for the euro zone and 0.2 percentage points for the US.
Growth forecasts moved up too. Economists upgraded global growth to 3.0% this year and 3.2% next year, from 2.9% and 3.1% in the July poll. The 2027 figure remains below the 3.4% the International Monetary Fund predicts.
Most central banks have raised interest rates only a few times or not at all, but more could come if inflation pressures broaden. A global rout in bond markets in recent months has also tightened financial conditions through higher yields.
Source: Investing.com (Reuters)
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