High inflation is expected to persist across the global economy well into 2027, according to a Reuters poll of more than 500 economists released October 27, 2026. Forecasters raised 2027 inflation estimates for 31 of the 50 economies surveyed, warning that elevated energy costs are now spreading into broader consumer prices.
Key Takeaways
- Economists raised 2027 inflation forecasts for 31 of 50 economies, including 15 of 21 developed economies.
- Crude oil has stayed above $100 a barrel since October 7 and reached a six-month high above $117 last week.
- Global growth forecasts rose to 3.0% for 2026 and 3.2% for 2027, supported by more than $1 trillion in AI investment since last year.
- The IMF projects global headline inflation of 4.7% in 2026, easing to 4.1% in 2027.
- The IMF found that measures to suppress prices can cost 3 to 22 times more than temporary, targeted support for vulnerable households.
Economists Raise 2027 Inflation Forecasts For 31 Of 50 Economies
The direction of the latest Reuters poll is clear. Of the 50 economies covered, forecasters raised their 2027 inflation outlook for 31. Among the 21 developed economies in the survey, 15 saw upward revisions, a sign that price pressure is reaching countries that usually keep inflation low.
The revisions have built up over several quarters. Across the last three quarterly polls, median 2027 inflation forecasts have risen by 0.7 percentage points for Britain, 0.5 points for the euro zone and Brazil, 0.4 points for India, and 0.2 points for the United States. Janet Henry, global chief economist at HSBC, said she is “much more concerned about inflation again.”
Energy Costs Are Spreading Into Core Inflation
The concern is no longer only about fuel prices. Crude oil has stayed above $100 a barrel since October 7 and is up more than 60% over roughly eight months, since the conflict in the Middle East began. Economists now see signs that those costs are passing into core inflation.
Core inflation strips out volatile food and energy prices to show underlying price trends. When energy costs feed into the price of transport, manufactured goods and services, core measures rise as well. That is what central banks watch most closely, because it suggests inflation is becoming entrenched rather than temporary.
Seth Carpenter, global chief economist at Morgan Stanley, noted that higher energy prices are rippling through the global economy and that pass-through into core measures is beginning to emerge. For households, this means price increases are showing up beyond the gas pump, in everyday purchases.
AI Investment Keeps Global Growth Ahead Of Expectations
The global economy is not slowing the way it typically would during an energy shock. Economists in the poll upgraded global growth forecasts to 3.0% for 2026 and 3.2% for 2027, up from 2.9% and 3.1% in July. The 2027 estimate remains below the International Monetary Fund’s projection of 3.4%.
Much of that resilience comes from spending on artificial intelligence. More than $1 trillion has been invested in AI technology globally since last year, flowing into data centers, semiconductors and power generation. In the United States, AI capital spending has become the main driver of domestic growth, with the economy forecast to expand 2.3% in 2026 and 2.1% in 2027.
This creates the paradox at the center of the 2026 global inflation outlook. Strong investment keeps output and employment steady, but that same demand adds to price pressure at a time when energy costs are already high. Earlier polls in April and July pointed to weak growth with high inflation. The latest results point to firmer growth with persistent inflation.
Higher Borrowing Costs Add To Household Pressure
The cost of living crisis is also showing up in borrowing costs. A global selloff in bond markets in recent months has pushed yields higher, tightening financial conditions for governments, businesses and households.
The majority of central banks have raised interest rates only a few times, or not at all, since energy prices climbed. The Reuters poll suggests more increases could follow if inflation spreads further into core prices, which would raise the cost of mortgages, loans and credit for households already stretched by higher prices.
IMF Favors Targeted Support Over Price Controls
The IMF’s October 2026 World Economic Outlook offers a practical guide for how governments might respond. It projects global headline inflation rising to 4.7% in 2026 before easing to 4.1% in 2027, with energy-importing economies outside the technology value chain facing the toughest outlook.
In its research on past cost-of-living crises, the IMF found that measures designed to suppress prices, such as caps and broad subsidies, can require 3 to 22 times more public money than temporary, targeted transfers to the most vulnerable households. Its recommendation is to let prices adjust while directing support to those who need it, preserving limited fiscal space for future shocks.
The IMF lists the downside risks as further conflict escalation, a reassessment of expectations around AI, renewed trade tensions and fiscal vulnerabilities. Each could push inflation and growth in opposite directions from current forecasts.
Central Banks Face Their Next Test This Week
The poll arrives just before a busy stretch for monetary policy, as five major central banks set interest rates between October 28 and 30. The U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada and the Reserve Bank of New Zealand will each weigh the same question: whether energy-driven inflation is fading or settling into core prices. Their decisions will show how seriously policymakers are treating the risk the Reuters poll describes.
FAQs
What Is Core Inflation?
Core inflation measures price changes excluding food and energy, which tend to swing sharply. It gives a clearer view of underlying inflation trends, which is why central banks rely on it when setting interest rates.
Is The World In A Cost Of Living Crisis?
Many economies are facing cost-of-living pressure in 2026. Elevated energy prices and rising core inflation are squeezing household budgets, even as global growth holds up better than expected.
What Is The Global Inflation Forecast For 2027?
The IMF projects global headline inflation will ease to 4.1% in 2027 from 4.7% in 2026. Economists in the latest Reuters poll raised their 2027 inflation forecasts for 31 of 50 economies, indicating price pressures may last longer than expected.
How Are Governments Responding To Rising Living Costs?
Responses vary by country. The IMF recommends temporary, targeted support for vulnerable households rather than price caps, finding that price-suppressing measures can cost 3 to 22 times more than targeted transfers.
