Iran War: Inflation Hit Highest 1 Month Spike In 4 Years
Inflation Hit Highest 1 Month Spike In 4 Years Due To Iran War
While Iran and the United States have agreed to a two-week ceasefire that’s looking shakier by the day, the impact of the war is still being felt by the global economy. Last month, inflation rose at its sharpest in four years, largely driven by higher gas prices.
According to NBC News, inflation rose to 3.3% in March, up 0.9% from the month before. Gas prices increased by 21.2%, their largest single-month increase since 1967. I gotta be honest, folks, I’m getting real tired of living through historically bad economic changes. While a ceasefire was declared last Tuesday, there hasn’t been a meaningful drop in gas prices. Anecdotally speaking, I’ve seen gas prices drop a whopping 10 cents from $4.99 to $4.89 in Arizona.
Now that’s what I call progress, baby.
The misguided Iran war has created a series of headaches for the Trump administration. Trump ran on lowering prices and not starting any new wars, yet at the start of the second year of his term, Trump started a new war that has dramatically increased prices. We were already in a K-shaped economy, where the richer are getting richer, and the poor are getting poorer, and the sharp increase in gas prices didn’t help matters.
AP reports that there are growing concerns that if gas prices continue to stay so high, it would have dramatic downwind consequences for the American economy. There was already a cost-of-living crisis before the Iran war, and the inflated gas prices could result in families struggling to afford other necessities, such as rent. Once the essentials become a struggle to afford, it would slow spending in other sectors, slowing the economy and potentially leading to further unemployment.
“It’s painful in the near term,” Michael Pearce, chief U.S. economist at Oxford Economics, told AP. “It’s going to get more painful in April,” as a result of further gas price increases lifting inflation even higher.
From AP:
Consumer sentiment plunged to a record low in April, according to a survey released Friday by the University of Michigan, largely because of the Iran war and concerns over higher gas prices. Their Index of Consumer Sentiment fell to 47.6, from 53.3 in March.
“Many consumers blame the Iran conflict for unfavorable changes to the economy,” said Joanne Hsu, the university’s director of consumer surveys.
High prices had angered American voters before the war and the spike in prices for oil and everything that entails, from the pump to the grocery store, could make it more difficult for the president’s party to hold on to seats in both the House and the Senate in next year’s midterms.
Polling by the Associated Press-NORC Center for Public Affairs Research last month found that about six in 10 Republicans are at least “somewhat” concerned about affording gas in the next few months.
Another point of concern regards the Strait of Hormuz, which has become a focal point in the conflict. While ships were able to flow freely through the Strait of Hormuz before the war, Iran has locked down access and is considering charging a toll for entry. This would obviously lead to a permanent increase in prices, as that cost would definitely be passed down to the consumer.
One of the downwind effects of the Strait’s closure is rising food prices. While food costs remained relatively neutral throughout March, much of the world’s fertilizer supply passes through the Strait of Hormuz. Should Iran and the U.S. fail to agree on a permanent ceasefire resolution, it would likely lead to food scarcity, which would obviously increase prices. Those increases would also be compounded by rising fuel costs, as the nation’s food supply is largely transported via diesel trucks.
How anyone thought a man who clearly doesn’t think through the consequences of his actions would have a positive impact on the American economy genuinely eludes me.
SEE ALSO:
Iran War Already Increasing Gas Prices, Mortgage Rates
Senate Democrats Estimate Iran War Cost Americans $8.4B In Gas Prices
Inflation Hit Highest 1 Month Spike In 4 Years Due To Iran War was originally published on newsone.com
