Reuters poll finds high inflation to persist into 2027

High inflation is likely to stay in the global economy well into next year, according to a Reuters poll published Oct. 27. Economists in the survey are increasingly worried that price pressures will become entrenched and spread beyond the energy shock caused by the Middle East conflict. More than 500 economists surveyed this month raised their 2027 inflation forecasts for 31 of the 50 economies covered. They also raised growth forecasts for 23 of them.reuters.com

The upgrades extend to economies that usually see low price pressures. Forecasters raised 2027 inflation projections for 15 of the 21 developed economies in the poll, which Reuters said suggests inflation worries are broadening.reuters.com

Oil and AI drive the outlook

Crude oil has stayed above $100 a barrel since Oct. 7 and hit a six-month high of more than $117 last week, Reuters reported. Prices are up more than 60% since the US-Israeli war with Iran began almost eight months ago. Meanwhile, more than $1 trillion invested in artificial intelligence worldwide since last year has helped some economies hold up even as living costs squeeze households, according to CNA's republication of the Reuters report.channelnewsasia.com+1

The two previous polls, in April and July, pointed to weak growth alongside high inflation. This one points to inflation paired with stronger economic performance. Economists raised their global growth forecasts to 3.0% for this year and 3.2% for 2027, up from 2.9% and 3.1% in July. The 2027 figure is still below the International Monetary Fund's 3.4% forecast.reuters.com

Over the past three quarterly polls, median 2027 inflation forecasts have risen by 0.7 percentage points for Britain, 0.5 points for the euro zone, 0.5 points for Brazil, 0.4 points for India and 0.2 points for the US.channelnewsasia.com

Economists sound the alarm

"I am getting much more concerned about inflation again," said Janet Henry, global chief economist at HSBC. She added that the longer the Middle East situation escalates, "the greater the likelihood that we get not just higher but more persistent inflation".reuters.com

Seth Carpenter, global chief economist at Morgan Stanley, wrote in a note that activity "remains resilient, supported by the AI-led investment cycle." He also warned that "signs of energy pass-through into core measures are beginning to emerge".channelnewsasia.com

Central banks under pressure

Most central banks have raised rates only a few times or not at all, but more hikes could follow if inflation broadens, according to Reuters. In a separate Reuters poll, 94 of 100 economists expected the Federal Reserve to hold rates at its Oct. 27-28 meeting, and all 100 expected a hike in December. Most economists polled also expect the Bank of England to raise rates to 4.0% in November.reuters.com+2

Living costs are also shaping politics. Polls show they are a top concern for voters ahead of the US midterm elections on Nov. 3.reuters.com