Page 9 - Policy Economic Report - Jan 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Global Inflation

Global inflation is projected to continue its decline, with headline inflation falling to 3.8 percent in 2026
and 3.4 percent in 2027.

• 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.

• 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 driven by subdued food prices.

Global Trade
Nearly two thirds of global trade take place within value chains that are being reshaped by geopolitical
tensions, industrial policy, and new technologies. Firms are diversifying suppliers and relocating
production closer to key markets to reduce risk.

Figure 4: Global trade growth- Annual growth rates of selected bilateral flows relative to the global
average in the period

Source- UNCTAD Page | 8

January 2026