Economists raised their inflation forecasts for next year in 31 of 50 economies in an October survey, as expensive oil adds to costs and threatens to spread price increases beyond energy. The survey also found higher inflation forecasts in 15 of the 21 developed economies covered, while growth estimates improved for 23 countries.
Crude oil prices have remained above 100 USD per barrel since 7 October and exceeded 117 USD last week, their highest level in six months. Oil has risen more than 60% since the U.S.-Israeli war with Iran began almost eight months ago, increasing production and transport costs and adding pressure to consumer prices.
Across the previous three quarterly surveys, median inflation forecasts for the coming year rose by 0.7 percentage points in the United Kingdom, 0.5 percentage points in the euro zone and 0.2 percentage points in the United States. Forecasts also increased by 0.4 percentage points in India and 0.5 percentage points in Brazil.
Despite inflation concerns, economists expect the global economy to grow 3% this year and 3.2% next year, up from July estimates of 2.9% and 3.1%, respectively. The forecast for next year remains below the International Monetary Fund’s estimate of 3.4%.
In the United States, growth is forecast at 2.3% this year and 2.1% next year. Large investments in artificial intelligence are among the key drivers of expected U.S. economic growth.
Rising inflation pressures could prompt central banks to raise interest rates again, particularly if higher energy costs feed through to a wider range of goods and services. Bond-yield increases in global markets have already tightened financial conditions, while high living costs remain an important issue for households and political campaigns worldwide.
