Global inflation expected to pick up from Iran war, survey shows

Inflation around the world is seen picking up due to the war with Iran, while growth prospects remain largely unaffected for now, according to a global survey of economists by Bloomberg News.

Half of respondents see somewhat quicker inflation in the eurozone, while a similar share predicts that outcome for the US, according to the survey conducted Monday. Nearly 40% expect such a result in China, which is defined by a 0.3 to 0.9 percentage-point acceleration in consumer price growth from prior expectations.

The biggest inflationary threat from the war stems from increased oil and gas prices, as about one-fifth of the world’s seaborne supply typically passes through the Strait of Hormuz, which has all but ground to a halt. There also stands to be knock-on effects from things like higher airfares and distribution costs, plus broader supply-chain risks if the conflict is prolonged.

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The majority of respondents predict the war will have a minimal impact on gross domestic product in either the US, the eurozone, or China. But many respondents added that much will depend on how long the conflict lasts.

If sustained, higher oil prices would hurt major importers, including China, Europe, and India, while beneficiaries would include exporters such as Russia, Canada, and Norway, Bloomberg Economics’ Ziad Daoud and Dina Esfandiary wrote in a report. As for the US, consumers would lose out as higher fuel costs squeeze incomes, but the economy overall faces less of a drag as shale has made it an oil exporter.

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