High inflation to persist globally into next year, Reuters poll shows

More than 500 economists surveyed by Reuters raised 2027 inflation forecasts for 31 of 50 economies, citing persistent energy-price pressures and emerging pass-through to core inflation. Oil has remained above $100 a barrel since October 7, reached more than $117 last week and is up over 60% since the war with Iran began; economists said broader inflation could prompt additional central-bank rate increases. At the same time, global growth forecasts rose to 3.0% this year and 3.2% next year, supported in part by AI investment and resilient activity.

Analysis

The key market shift is from a stagflation hedge toward a reflation-with-inflation regime: resilient activity makes it harder for central banks to look through energy pass-through, while higher yields can tighten financial conditions before policy rates move. That combination favors inflation protection and cash-generative commodity exposure over long-duration assets, but does not justify chasing crude after a large geopolitical repricing.

Near term (days to weeks), rates and energy volatility are likely to dominate; a ceasefire or demand response could quickly unwind the oil premium. Over 1–3 months, watch whether energy costs leak into core services, wages and inflation expectations, and whether central banks revise guidance. Over 6–18 months, AI investment is a two-sided factor: it sustains demand and near-term power/capacity bottlenecks, but productivity gains could ultimately disinflate. The survey is a forecast signal, not proof that realized core inflation is broadening; the relatively smaller US forecast revisions also argue against treating this as a uniform global trade.

Key Decisions for Investors

• Prefer a measured long inflation-protection / short nominal-duration position, such as inflation-linked government bonds versus comparable nominal bonds, rather than an outright duration bet. Enter in stages; reduce if core inflation and market inflation expectations stop firming or energy prices retrace materially.
• For equities, favor a relative position in energy producers over rate-sensitive consumer discretionary or long-duration growth exposure, sized to tolerate a sharp geopolitical premium reversal. Avoid adding outright crude exposure after its substantial rise; verify producer earnings sensitivity, hedging and policy risk before selecting names.
• Keep AI exposure selective: favor businesses with demonstrable pricing power or constrained power/infrastructure supply over unprofitable, long-duration growth. Higher discount rates can compress valuations even if AI capex supports aggregate activity.
• Catalyst checks over the next 1–3 months: core inflation breadth, wage growth, inflation expectations, central-bank guidance and oil-market supply signals. A sustained easing in core measures alongside lower energy prices would falsify the persistent-inflation thesis and favor covering inflation hedges and restoring duration.