Expected global average inflation rate 4% in 2025, 3.9% in 2026: ifo

Experts also expect high inflation rates worldwide in the years ahead. With an average expected inflation rate of 3.9 per cent for 2026, expectations globally are only 0.1 percentage point (pp) lower compared to expectations for 2025.

In the long term, up to 2028, inflation expectations also remain at a high level of 3.7 per cent. This represents a minimal decrease compared with 3.8 per cent in the Q1 2025 survey. Long-term inflation expectations are, therefore, not increasing anymore but rather stagnating as well, according to an ifo release.

Inflation expectations vary widely across the world regions. For 2025, experts expect the lowest inflation rates in Western Europe (1.8 per cent), where the expectations are below the 2-per cent inflation target of the European Central Bank.

Expectations in Northern America, Oceania and Northern Europe are slightly higher (2.7 per cent-3.1 per cent). Notably, expectations in Northern America remain elevated compared to the end of the previous year, reflecting still ongoing inflationary pressures.

Expectations in other parts of Europe (Southern Europe: 3.2 per cent, Eastern Europe: 7.6 per cent) remain above central banks’ inflation targets.

Within Asia, there is substantial heterogeneity across sub-regions. While expectations in Eastern Asia (4.3 per cent) and South-Eastern Asia (3.3 per cent) are moderately elevated compared to inflation targets, expectations are significantly higher in Western, Southern and Central Asia (8 per cent, 10.7 per cent and 11.3 per cent respectively).

With the exception of Southern Africa (4.3 per cent), all other African regions expect short-run inflation rates to be well above average: Western Africa: 7.8 per cent; Middle Africa: 14.8 per cent; Eastern Africa: 22.9 per cent; Northern Africa: 40.8 per cent, the release noted.

In the Americas, inflation expectations are mixed, ranging from 2.7 per cent in Northern America to 9.8 per cent in South America. Experts in Central America and the Caribbean report relatively moderate expectations at 3 per cent.

For 2028, experts expect inflation rates in Western Europe (1.9 per cent), Northern Europe (2.6 per cent), Northern America (2.7 per cent) and Oceania (2.7 per cent) to almost return to or approach the 2-per cent inflation rate targeted by many central banks.

However, for some sub-regions, the expectations are higher than in the previous quarter. Higher long-term inflation expectations are recorded for example in Southern Europe (3.1 per cent), Eastern Europe (5.5 per cent), Western Asia (6.1 per cent), Southern-Eastern Asia (3.6 per cent), and in Southern Africa (5.2 per cent). The highest long-term inflation rates are expected in Northern Africa (23.6 per cent) and Eastern Africa (20.5 per cent).

The EES is a quarterly survey conducted by the ifo Institute. More than 1,300 economic experts from 121 countries took part in the survey between June 17, 2025 and July 1, 2025.

ALCHEMPro News Desk (DS)