Iran War Fuels Energy Shock, Driving Inflation Surge in U.S. and Europe

The Iran-Israel-U.S. conflict that began in late February prompted Iran to block the Strait of Hormuz, a conduit for about 20 % of world oil. Brent crude rose above $120 per barrel and U.S. West Texas Intermediate above $105, up from roughly $67 pre-war, spurring a sharp rise in gasoline prices in the United States and Europe.

The Hill

U.S. Commerce data show the PCE price index rose 0.7 % in March (3.5 % YoY), the fastest pace in three years. Core PCE (ex-food, energy) increased 0.3 % monthly and 3.2 % YoY. Average U.S. gasoline hit $4.30 per gallon, a 21 % jump from February. Eurostat reported 3.0 % annual inflation in April, driven by a 10.9 % rise in energy prices.

CNN

Fed Chair Jerome Powell said the Fed will likely keep rates unchanged, noting that “people are experiencing higher gas prices … and that hurts.” The Fed left its policy rate steady. ECB President Christine Lagarde also kept the main rate at 2 % after debating a hike, rejecting the label “stagflation.” The Bank of England and Bank of Japan likewise left rates unchanged.

Euronews

Democratic Rapid-Response Director Kendall Witmer charged President Donald Trump with forcing Americans to shoulder the war’s cost while promising lower prices. CNBC host Jim Cramer called the March inflation numbers “just bad” and blamed the administration’s rhetoric. BMO Capital Markets’ Scott Anderson warned that persistent inflation could erode consumer purchasing power as the personal-savings rate fell to 3.6 %.

NEW DATA: As Trump’s War With Iran Hits 2 Months, Inflation Surges and Gas Prices Hit Historic Highs

Australian outlets reported a 4.6 % March inflation rate, higher than U.S. and eurozone figures, and some U.S. media described core inflation as 3.5 % rather than the 3.2 % reported by the Commerce Department, showing divergent interpretations of the data.

The Hill

• “We’re very well aware that people are experiencing higher gas prices all over the country now,” Powell said Wednesday. “And that hurts.” — Jerome Powell, Federal Reserve Chair

Associated Press

• “We don’t apply that flashy term, ‘stagflation,’ to the circumstances that we have.” — Christine Lagarde, ECB President

Associated Press

• “Yeah, these numbers are just bad! And somehow, we think that bonds and rates are going up,” — Jim Cramer, CNBC host

The Hill

• “ In response, DNC Rapid Response Director Kendall Witmer released the following statement: “Donald Trump has forced Americans to bear the brunt of his deadly and costly foreign war, while they struggle to pay their rent, buy groceries, or afford lifesaving medicine.” — Kendall Witmer, DNC Rapid-Response Director

NEW DATA: As Trump’s War With Iran Hits 2 Months, Inflation Surges and Gas Prices Hit Historic Highs

The Fed, ECB and other major central banks will meet in June to decide on rate policy as oil prices stay above $120 per barrel, a scenario that could keep global growth below 2 % and inflation near three-year highs.

Associated Press