IMF says Australia to see ‘drawn-out persistence’ in inflation
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The news: The International Monetary Fund (IMF) referenced Australia’s persistent above-target inflation figures in its latest World Economic Outlook update as tariffs continue to weigh on the economy.
The numbers: In its 2026 update, the IMF said: “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.”
The figures come despite Australia’s headline CPI cooling faster than expected to 3.4% in November according to data from the ABS released last week.
The IMF said that global inflation is projected to continue its decline, with headline inflation falling to 3.8% in 2026 and 3.4% in 2027. This is virtually unchanged from that in the October 2025 WEO.
Global growth is also projected to remain resilient at 3.3% in 2026 and at 3.2% in 2027. The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 update.
The context: The IMF update also warned that the global economy is at risk of being disrupted both by a reversal in the AI boom as well as geopolitical uncertainty meaning that risks to the global outlook “remain tilted to the downside.”
“Reevaluation of productivity growth expectations about AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth. Trade tensions could flare up, prolonging uncertainty and weighing more heavily on activity”, the report notes.
While the Treasury expects both underlying and headline inflation in Australia to be lower than global averages, commenting on the data Treasurer Jim Chalmers said: “The global economy is incredibly uncertain, with persistently high inflation still a challenge for many countries around the world.”
“The three big economic priorities for the Albanese Government this year are addressing inflation, productivity and global uncertainty, and this report shows why that’s the right approach”, Chalmers added.
The sources: IMF World Economic Outlook 2026, Jim Chalmers statement
