Now Reading: Iran war pushes US inflation to 4.2%, threatens Wall Street rally
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Iran war pushes US inflation to 4.2%, threatens Wall Street rally
Iran war pushes US inflation to 4.2%, threatens Wall Street rally
The Iran war has pushed US inflation to 4.2% in May, more than double the Federal Reserve's target, Hindustan Times reports. The spike follows the shutdown of the Strait of Hormuz, which…
The Story in Brief
The Iran war has pushed US inflation to 4.2% in May, more than double the Federal Reserve's target, Hindustan Times reports. The spike follows the shutdown of the Strait of Hormuz, which disrupted 20 million barrels of oil daily, driving oil prices up 70%. Core PCE inflation, a key measure excluding energy, remains at 3.4%, its highest since October 2023, suggesting the problem extends beyond energy.
Even if peace talks progress, fuel prices may stay high, and supply chain costs are rising. The Cleveland Fed forecasts headline inflation to fall to 3.22% in August, but core PCE at 3.36%.
The Indian Opinion
The narrative that Trump's tariffs are the main inflation driver now looks one-sided. The Iran war's energy shock has been far bigger. But the assumption that peace will quickly bring inflation down is also questionable. Core PCE remains stubbornly high, suggesting supply chain changes are lasting. The real test: will core PCE fall below 3% even after the Strait of Hormuz reopens?
Source: hindustantimes.com
This story was synthesised by AI from the source linked above.
