IMF Warns Global Inflation Will Rise in 2026
IMF projects higher global inflation in 2026, citing Middle East conflict, energy prices and advances in artificial intelligence.
Global inflation forecast points to higher consumer prices in 2026 as conflict, energy costs and artificial intelligence reshape the world economy.
The International Monetary Fund (IMF) has raised its global inflation forecast, projecting that headline inflation will increase from 4.1 per cent in 2025 to 4.7 per cent in 2026. In its July 2026 World Economic Outlook Update, the IMF said the global economy is being shaped by the combined effects of conflict in the Middle East and rapid advances in artificial intelligence (AI).
The report projects global economic growth of 3.0 per cent in 2026 and 3.4 per cent in 2027, compared with an average of 3.5 per cent recorded in 2024 and 2025. According to the IMF, the slowdown reflects supply disruptions caused by the conflict in the Middle East, partly offset by stronger demand driven by the expanding AI sector.
The global inflation forecast also highlights differing impacts across countries. The IMF said energy exporters outside the conflict zone are benefiting from favourable trade conditions, while economies actively involved in the technology value chain continue to experience stronger growth. In contrast, energy-importing nations with limited participation in AI development, including many low-income countries, are expected to face weaker economic activity.
The Fund warned that the earlier decline in inflation has stalled and identified renewed conflict, commodity price volatility, supply chain disruptions and increased trade fragmentation as key downside risks. It also noted that changing expectations surrounding technology investment could affect future growth.
To address these challenges, the IMF urged governments to restore price stability through clear policy communication, protect central bank independence and strengthen financial oversight. It also called for rebuilding fiscal buffers, promoting energy security, improving AI readiness and advancing structural reforms alongside stronger international cooperation.
The report added that rising energy prices have pushed up inflation expectations for 2026, although there is currently little evidence that long-term inflation expectations have become unanchored.
How should governments balance inflation control with efforts to support economic growth during periods of global uncertainty?
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