Further worldwide inflation drop likely in short term: German survey

However, long-term inflation expectations show a stagnating or rising trend.

The expected global average inflation rate is 4.6 per cent for this year, the institute said in a release citing the Economic Expert Survey (EES), a quarterly survey conducted by itself and the Swiss Economic Policy Institute. This is the median of average expected inflation rates at the country level.

The average rate of 4.6 per cent expected in this quarter is significantly lower than the expected rate of 6 per cent in the second quarter last year. This means short-term inflation expectations are still falling, but remain at a high level worldwide.

Experts also expect high inflation rates worldwide in the years ahead. With an average expected inflation rate of 4.4 per cent for 2025, a slight decline is also expected on average compared with 2024.

In the long term up to 2027, inflation expectations continue to be high at 4 per cent. Long-term inflation expectations have even risen again compared to the results of the previous quarter (3.6 per cent).

Inflation expectations vary widely among the world’s regions. For 2024, experts expect the lowest inflation rates in Western Europe (2.8 per cent). Expectations in North America and Northern Europe are comparable (3.1-3.7 per cent).

In contrast, experts in regions such as East Africa (35 per cent) and South America (26 per cent) expect inflation rates to be well above average in the short term.

While short-term expectations have remained stable over several quarters, the expected inflation rates in this quarter represent a decline in expectations for most regions compared to the previous quarter.

For 2027, experts expect inflation rates in Western Europe (2 per cent) and North America (2.3 per cent) as well as in Northern Europe (2.8 per cent) and Southern Europe (2.6 per cent) to almost return to the 2 per cent inflation rate targeted by central banks.

The experts expect higher long-term inflation rates in Eastern Europe (5.1 per cent) and in parts of Asia (up to 11 per cent).

The highest long-term inflation rates are expected in East Africa (41 per cent) and North Africa (18 per cent).

Fibre2Fashion News Desk (DS)