The Organization for Economic Cooperation and Development has forecast U.S. all-items inflation at 4.2% for 2026.
“The breadth and duration of the conflict are very uncertain, but a prolonged period of higher energy prices will add markedly to business costs and raise consumer price inflation, with adverse consequences for growth,” the OECD stated in the report.
The forecast represents a significant increase from the previous projection of 2.8%, and it is much higher than the 2.7% estimate made by Fed officials when they updated their own forecasts last week.
The revision is driven by two main factors: the war in the Middle East and the ongoing effect of U.S. tariffs that, although lower than before, still influence prices worldwide.
“The current supply-induced rise in global energy prices can be looked through provided inflation expectations remain well-anchored, but policy adjustment may be needed if there are signs of broader price pressures or weaker labour market conditions,” the report stated.
The agency forecasts U.S. gross domestic product growing at 2% this year before slowing to 1.7% in 2027. GDP decreased sharply to a 0.7% rate in the fourth quarter of 2025.
The OECD releases its outlook twice a year.
By CEO NA Editorial Staff
