International Monetary Fund projects Aussie inflation to stay above 3% in 2025

Australians are being urged to prepare for further financial pain after the International Monetary Fund issued a dismal prediction for next year.

The International Monetary Fund projects Australian inflation will run above the 3 per cent target next year, in devastating news for Aussies who are already struggling to make ends meet during the cost-of-living crisis.

The IMF’s World Economic Outlook, released overnight Tuesday, has bumped our consumer price index forecast from 2.8 to 3.6 per cent for 2025.

That puts Australia in second place behind Slovakia, and a full percentage point above New Zealand, the UK, the US, Japan and Singapore.

Of global advanced economies, only Slovakia is tipped to have higher consumer price inflation than Australia next year. Picture: NewsWire / Steve Pohlner

The IMF forecasting shows inflation will continue along its downward trajectory to 3 per cent in December thanks to relief from government cost-of-living payments, but those subsidies will run out by the end of 2025.

Inflation may well fall into the Reserve Bank of Australia and federal government’s target range of 2 to 3 per cent when key quarterly data is released next week.

But the price pressures will be front and centre for Treasurer Jim Chalmers when he heads to the US this week to meet his international counterparts and the US central bank boss.

The IMF warns against countries putting up walls, slicing margins for traders, and forcing up prices for consumers.

“An intensification of protectionist policies would exacerbate trade tensions, reduce market efficiency, and further disrupt supply chains,” it says in the world economic outlook report.

Australia’s GDP growth is tipped to remain sluggish and trail other advanced Asian economies for this year as a whole, but overtake the comparative benchmark next year.

Last year Australian GDP growth was a mile behind those comparable regional economies, at 2 per cent versus 5 per cent.

Originally published as International Monetary Fund projects Aussie inflation to stay above 3% in 2025