Inflation is rising again in the United States and globally as the ongoing Middle East conflict—centered on the Iran war—continues to disrupt energy markets, supply chains, and trade flows. New economic assessments show that higher fuel costs and shipping disruptions are pushing prices upward while simultaneously slowing economic growth.
A United Nations mid‑2026 economic update reports that the conflict has halted the global disinflation trend, with inflation in developed economies expected to rise from 2.6% in 2025 to 2.9% in 2026, driven largely by higher energy, transport, and import costs. The report notes that constrained energy supply, surging freight costs, and broader supply chain pressures are increasing production expenses worldwide.
In the United States, consumer prices rose 3.8% year‑over‑year in April, marking the largest annual increase in nearly three years. Energy prices have surged 17.9% over the past 12 months, with gasoline prices up 28.4% compared to last year. The national average price for a gallon of gasoline reached $4.50 in mid‑May, up from $2.98 when the conflict escalated in February. Analysts attribute the rise to sharply higher oil and jet fuel costs linked to the war.
Economic modeling from the Centre for Economic Policy Research (CEPR) finds that the Iran war’s disruption of oil exports is expected to raise U.S. headline inflation by 0.6 percentage points in 2026, even under an optimistic scenario in which the Strait of Hormuz reopens after one quarter. Core inflation is projected to rise by 0.2 percentage points, reflecting the broad reach of energy‑driven price increases.
Global commodity markets are also under strain. The World Bank forecasts a 24% surge in energy prices in 2026, the largest increase in four years, as attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz—responsible for roughly 35% of global seaborne crude oil trade—trigger the largest oil supply shock on record. Brent crude prices remain more than 50% higher than at the start of the year, and fertilizer prices are projected to rise 31%, adding pressure to food production and consumer costs.
The International Monetary Fund (IMF) warns that the conflict is creating a global drag on growth, with higher energy and input costs affecting major importers in Asia, Europe, Africa, and Latin America. Roughly 25–30% of global oil and 20% of liquefied natural gas pass through the Strait of Hormuz, making the region’s instability a significant driver of worldwide inflation. The IMF notes that all plausible conflict scenarios point toward “higher prices and slower growth,” with low‑income countries facing heightened risks of food insecurity.
Together, these developments show a clear pattern: the Iran war is exerting upward pressure on prices while simultaneously weakening economic momentum. Energy‑driven inflation, elevated shipping costs, and supply chain disruptions are combining to create a challenging environment for households, businesses, and policymakers as the global economy navigates heightened uncertainty.
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Sources
- United Nations
- Al Jazeera
- CEPR
- World Bank Group
- International Monetary Fund (IMF)