BAKU, Azerbaijan, January 19. Global inflation is projected to continue its decline, with headline inflation falling to 3.8 percent in 2026 and 3.4 percent in 2027, Trend reports with reference to the International Monetary Fund’s (IMF) World Economic Outlook January 2026 edition.
“This is virtually unchanged from that in the October 2025 WEO, with overarching trends of softening demand and lower energy prices remaining intact. Divergence between the United States and most other countries lingers,” reads the report.
IMF analysts note that with pass-through from higher tariffs gradually materializing, US core inflation is projected to return to the country’s 2 percent target during 2027.
“Australia and Norway are also projected to see some drawn-out persistence in above-target inflation. In the United Kingdom, inflation, which increased last year partly due to one-off regulated price changes, is expected to return to target by the end of 2026 as a weakening labor market continues to exert downward pressure on wage growth. In Japan, inflation is expected to moderate in 2026 and converge toward the country’s target in 2027, as food and commodity prices ease,” the report says.
WEO reveals that in the euro area, headline inflation is projected to hover around 2 percent, with core inflation projected to decline to that level in 2027.
“Inflation in China is projected to start rising from low levels, whereas inflation in India is expected to go back to near target levels after a marked decline in 2025 driven by subdued food prices,” says IMF.