War driving inflation
The Middle East conflict is pushing fuel costs higher and accelerating global inflation while denting consumer confidence. (economictimes.indiatimes.com) On top of that, U.S. trade-policy uncertainty — including a 90-day tariff pause — has added market volatility and helped push American consumer sentiment toward its weakest reading in decades, according to market analysts and survey reports. (freemalaysiatoday.com) (webanditnews.com) (webanditnews.com)
U.S. inflation jumped in March as war-driven fuel costs surged, and consumer sentiment fell to a record low in early April. (bls.gov) (cnbc.com) The Consumer Price Index rose 0.9 percent in March and 3.3 percent from a year earlier, the Bureau of Labor Statistics said on April 10. Energy prices rose 10.9 percent in the month, and gasoline jumped 21.2 percent, accounting for nearly three-quarters of the monthly increase. (bls.gov) In early April, the University of Michigan’s preliminary consumer sentiment index dropped to 47.6 from 53.3 in March, a 10.7 percent slide and the weakest reading in the survey’s history. CNBC reported consumers also lifted their one-year inflation outlook to 4.8 percent, up from 3.8 percent in March. (cnbc.com) (sca.isr.umich.edu) The war is hitting the global economy through energy, shipping, and finance. The International Monetary Fund said on March 30 that about 25 percent to 30 percent of global oil and 20 percent of liquefied natural gas move through the Strait of Hormuz. (imf.org) The International Monetary Fund said large energy importers in Asia and Europe are already absorbing higher fuel and input costs, while poorer importing countries face tighter financing and rising food insecurity. Its economists wrote that “all roads lead to higher prices and slower growth” if the conflict persists. (imf.org) American households were already showing strain before the April collapse in sentiment. In March, the Michigan survey said middle- and higher-income consumers with stock holdings posted especially large confidence declines after gasoline prices rose and financial markets turned volatile following the start of the Iran conflict. (sca.isr.umich.edu) Trade policy has added another layer of uncertainty. The White House said in May 2025 that it suspended a 34 percent reciprocal tariff for 90 days while keeping a 10 percent baseline tariff in place, and trade lawyers at Reed Smith said on April 8 that tariff rules have continued to shift under multiple presidential actions since February 2026. (whitehouse.gov) (tradecomplianceresourcehub.com) (ustr.gov) That mix leaves central bankers with a familiar problem: weaker confidence and slower growth on one side, faster headline inflation on the other. The next test comes on April 14 and April 15, when the International Monetary Fund publishes updated forecasts on growth, financial stability, and fiscal risks. (imf.org)
