IMF Warns Global Inflation Could Rise in 2026

The International Monetary Fund (IMF) has forecast that global inflation will rise from 4.1 per cent in 2025 to 4.7 per cent in 2026, as the world economy continues to face pressure from conflict, energy markets and rapid technological change.

In its July 2026 World Economic Outlook Update, the IMF explained that the global economy is balancing two major forces: the negative effects of the war in the Middle East and the positive impact of advances in artificial intelligence (AI) and technology adoption.

The report projected that global economic growth will reach 3.0 per cent in 2026 and 3.4 per cent in 2027, compared with the average growth rate of 3.5 per cent recorded in 2024–25. The IMF said the slowdown caused by conflict has been partly reduced by stronger demand linked to the expanding global technology cycle.

The impact of these challenges differs across countries. Energy exporters outside the conflict area may benefit from improved trade conditions, while nations connected to the technology supply chain could experience stronger growth. However, many low-income countries that rely heavily on energy imports and have limited technology participation may face weaker economic activity.

The IMF said the recent decline in inflation has slowed, creating fresh concerns around price stability. It warned that renewed conflict, supply chain disruptions, rising commodity prices and trade tensions could increase economic risks.

The organisation advised governments to focus on strong financial oversight, clear communication, independent central banks and careful fiscal policies. It also highlighted the need for reforms supporting energy security, AI readiness and stronger international cooperation.

The IMF noted that the global economy has managed recent shocks better than expected, but warned that the full impact of the Middle East conflict may still emerge as energy supplies and business conditions continue to adjust.

How should governments prepare their economies for rising inflation risks in the coming years?