Page 12 - Policy Economic Report -August 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

financially vulnerable economies remain more exposed to geopolitical shocks and tighter global financial
conditions.

Global Inflation Trends

Global inflationary pressures remained elevated during August, although recent data indicate a gradual
moderation from the peaks recorded earlier in the year. The IMF's latest data show that global headline
inflation declined from 4.9 per cent in May to 4.7 per cent in June 2026, after rising during the preceding
months as the Middle East conflict pushed up energy prices. Inflation remained considerably higher in
emerging market and developing economies, at 5.7 per cent, compared with 2.9 per cent in advanced
economies, highlighting the continued divergence in inflationary conditions across income groups.

The moderation in inflation has been supported by easing energy-price pressures and the gradual
unwinding of some supply disruptions. S&P Global's global PMI price indicators showed that the rate of
increase in prices charged by businesses declined for a third consecutive month in July, reaching its
weakest level since March. Goods-price inflation moderated particularly sharply, while manufacturing
input-cost inflation fell to its lowest level since February. However, services-price pressures remained
comparatively elevated as demand for consumer-facing services recovered.

The divergence between goods and services inflation has become increasingly important. While lower
energy costs helped reduce goods-price pressures, services providers continued to report higher selling
prices amid stronger demand and rising labour costs. Consumer-facing services recorded their fastest
increase in selling prices since May 2023, with tourism and recreation particularly affected by the recovery
in demand. Insurance costs also remained elevated as geopolitical and climate-related risks continued to
influence pricing.

Figure 2: Consumer price inflation, annual change (%)

Source: S&P Global Market Intelligence Page | 11

August 2026