Global Inflation Rates Expected to Remain Elevated

Recent surveys by the Ifo Institute and the Institute for Swiss Economic Policy reveal a persistent global inflation trend, with expectations of increased rates until 2028. Economists predict modest declines, with a global average inflation rate of 3.9% in 2025, slightly reducing to 3.5% in 2026 and 2027. These figures surpass the inflation targets of many central banks, such as the European Central Bank's aim of 2%.

Regions show significant differences in inflation expectations. Westeurope is predicted to achieve the 2% target by next year, while Eastern Europe faces much higher rates of around 7.5% this year, with a slight decrease expected next year. In stark contrast, Northern and Eastern Africa, along with South America, are projected to experience inflation rates exceeding 20%, and in some areas, even surpassing 30%.

North America is also not immune, with anticipated inflation rates rising to 2.6% by 2025 and 2.8% by 2026. Factors such as potential increased import tariffs under future US administration policies are cited as contributory elements.

The survey, conducted with 1,398 experts across 125 countries, highlights the global challenge of inflation management. Ifo researcher Niklas Potrafke suggests that significant interest rate cuts are unlikely, given the inflation outlook.

While some countries like Germany, Austria, and Switzerland enjoy relatively moderate inflation rates, other regions face more severe economic pressures. As central banks continue to navigate these challenges, the global economic landscape remains complex, with far-reaching implications for consumers, businesses, and governments.