The cost of living is expected to increase in the next 12 months, eroding real incomes worldwide. According to the latest Chief Economists' Outlook released by the World Economic Forum (WEF), household budgets will feel the pinch as essential items drive a renewed cost-of-living squeeze. The report is based on extensive consultations and surveys with chief economists from the public and private sectors.
An overwhelming 88 per cent of chief economists surveyed expect food prices to rise, while 83 per cent predict higher electricity bills and 77 per cent foresee increases in transport costs. This will likely lead to a decrease in real incomes, which is the actual buying power of a paycheck after taking inflation into account. The report warns that real incomes are expected to either stagnate or shrink across most regions.
Sub-Saharan Africa faces a particularly difficult outlook, with 31 per cent of chief economists expecting inflation-adjusted household earnings to drop over the coming year, while 42 per cent expect earnings to remain flat. Only a few emerging Asian economies, such as India and South-East Asia, are projected to see meaningful real income growth. This regional disparity highlights the challenges faced by different economies.
The report also notes that governments have far less room to help mitigate the effects of the cost-of-living squeeze. Since 2020, State intervention, such as stimulus checks, energy subsidies, and emergency relief programmes, served as a buffer protecting households and businesses from global shocks. However, only 28 per cent of economists expect governments to play that protective role over the next year.
High public debt burdens and depleted national coffers mean States no longer have the financial capacity to cushion families from price hikes. The WEF's Head of Economic Growth and Transformation, Attilio Di Battista, noted that government support played a critical role in navigating successive crises, but fiscal capacity is likely to be more constrained going forward.
With limited funds, governments are expected to rely on quick, broad-brush relief measures rather than direct cash payouts. Sixty per cent of economists expect States to reduce taxes on basic goods, 54 per cent expect consumption subsidies, and 50 per cent anticipate price caps. Only 26 per cent expect targeted cash transfers to low-income households.
The survey featured in this edition was conducted from August 4 to 20, 2026, and supports the WEF's Future of Growth Initiative, a space for exchange and collaboration to enable greater competitiveness and economic transformation. The report's findings highlight the need for governments and businesses to work together to strengthen the foundations of resilience before the next shock arrives.
Key points
- 88% of chief economists expect food prices to rise in the next 12 months.
