This year, Western Europe is predicted to record the lowest inflation rate at 2.1 per cent, with 2.4 per cent in Germany, 2.9 per cent in Austria, and 0.9 per cent in Switzerland. Expectations in Southern Europe stand at 3.4 per cent and Eastern Europe at 7.4 per cent, remaining above central banks’ inflation targets, as per the quarterly survey of experts conducted by ifo Institute.
Inflation expectations in North America have increased, with experts predicting a rate of 3.2 per cent in 2025—0.6 percentage points higher than the previous quarter’s forecast. Similar levels are anticipated for the following years, with inflation projected at 3.2 per cent in 2026 and 3.3 per cent in 2028.
Global inflation is forecast to reach 4.0 per cent in 2025, easing to 3.8 per cent by 2028, according to the ifo Institute.
Western Europe expects the lowest rates, while inflation remains above target in parts of Europe, Asia, and Africa.
North America sees rising expectations.
Long-term projections show persistent high inflation in regions like Eastern and Middle Africa.
“Compared to the previous quarter, inflation expectations have risen slightly,” said Niklas Potrafke, researcher at ifo. “America’s tariff policy is driving inflation expectations in many countries. In Germany, they are also influenced by the new public debt.”
Experts in Central America and the Caribbean anticipate relatively moderate inflation at 3.7 per cent. Among the regions where prices could rise particularly sharply are South America and large parts of Africa, where inflation rates of over 20 per cent are expected.
Except for Southern Africa (4.7 per cent), all other African regions expect short-run inflation rates to be well above average (Western Africa: 9.4 per cent; Middle Africa: 15.2 per cent; Eastern Africa: 28.4 per cent; Northern Africa: 36.1 per cent).
Within Asia, there is substantial heterogeneity across sub-regions. While expectations in Eastern Asia (3.8 per cent) and South-Eastern Asia (3.2 per cent) are only slightly elevated compared to inflation targets, expectations are significantly higher in Western, Southern, and Central Asia at 7.2 per cent, 8.7 per cent, and 10.7 per cent respectively.
Over the long term, inflation expectations differ across global regions. By 2028, experts anticipate rates in Western Europe (2.1 per cent), Northern Europe (2.6 per cent), and Oceania (2.8 per cent) to nearly return to or align with the 2 per cent targets set by many central banks. However, certain sub-regions are seeing higher expectations compared to the previous quarter.
Higher long-term inflation expectations are recorded in Southern Europe (3.0 per cent), Eastern Europe (4.7 per cent), Eastern Asia (4.0 per cent), Southern Asia (9.3 per cent), and in Southern Africa (4.5 per cent). The highest long-term inflation rates are expected in Middle Africa (12.5 per cent) and Eastern Africa (21.1 per cent).
The survey included responses from 1,489 economic experts across 131 countries.
Fibre2Fashion News Desk (SG)