US bears high inflation from Middle East conflict

The ongoing Middle East conflict is shaking confidence in the global economy and sending shockwaves through capital markets. Its spillover effect is now reaching into the real economy, shaping prices, costs, and everyday life in the US.

The inflation rate rose 3.3% in March, largely driven by higher energy prices, according to US Bureau of Labor Statistics, marking a two-year high.

The IMF now projects US inflation rate at 3.2% this year, above the pre-conflict estimate of around 2.5%. The OECD has raised its forecast further, from 2.8% to 4.2%.

According to the American Automobile Association, gasoline prices climbed from $2.98 per gallon at the end of February to around $4.09 as of April 25.

The impact goes beyond fuel. The Financial Times reports that jet fuel prices have nearly doubled, pushing up airline costs and ticket prices.

Economists warn that inflation could end the year well above pre-conflict projections, with lower-income households likely to feel the strain most.

The American Farm Bureau Federation notes that nitrogen fertilizer prices have risen by 30% since the conflict began, with higher food prices likely to follow later this year.

From energy to airfares to the food on the table, the chain is clear: Geopolitical conflict isn't distant—it shows up in the cost of everyday necessities.