Inflation is the primary economic risk associated with the Iran strikes. The origins of the pressure and the resulting vulnerabilities differ markedly across regions. Before the strikes, inflation was on a global down‑trend, with the notable exception of the United States. Trade‑tariff effects were becoming increasingly visible, although the overall impact on prices was smaller than initially anticipated. Higher tariffs produced a delayed inflationary response because many firms were reluctant to pass cost increases on to consumers. U.S. inflation has fallen from its 2022 peak but remains stuck above 3 %. The main vulnerabilities stem from reliance on external energy supplies. The United States enjoys the advantage of being a net energy exporter and faces no export constraints. By contrast, the euro‑area and most Asian economies are highly exposed: they generate little domestic energy and, in several cases, import oil and gas from the Middle East via the Strait of Hormuz.
Consequently, the key questions are: how likely is a sustained rise in inflation, and what will be its impact on overall economic activity?
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