The International Monetary Fund has warned that Australia is likely to experience a "drawn-out persistence" of above-target inflation, even as headline price pressures ease, citing the ongoing impact of tariffs and global uncertainty in its latest World Economic Outlook update.
In its 2026 projections, the IMF said inflation in the United States is expected to return to the Federal Reserve's 2% target by 2027 as the pass-through effects of higher tariffs gradually materialise, while Australia and Norway are forecast to face a more prolonged period of elevated inflation.
The assessment comes despite Australian Bureau of Statistics data released last week showing headline consumer price inflation cooled faster than expected to 3.4% in November 2025.
Globally, the IMF expects inflation to continue declining, with headline inflation projected to fall to 3.8% in 2026 and 3.4% in 2027, broadly unchanged from its October 2025 outlook.
Global economic growth is forecast to remain resilient at 3.3% in 2026 and 3.2% in 2027, reflecting a small upward revision for next year.
However, the Fund cautioned that risks to the outlook remain tilted to the downside, warning that a reversal of the artificial intelligence investment boom or heightened geopolitical tensions could disrupt growth, unsettle financial markets and erode household wealth.
Commenting on the report, Treasurer Jim Chalmers acknowledged that while Australia's inflation is expected to remain below global averages, persistently high prices continue to challenge many economies.
He said the findings underscored the Albanese Government's focus on inflation, productivity and managing global uncertainty amid an increasingly fragile international economic environment.