Iran war tensions have sent oil prices soaring, pushing U.S. consumer inflation to a projected 3.8% annual increase in April—the highest since 2023—according to Bloomberg economists. The core inflation rate, excluding volatile food and energy costs, is expected to rise to 2.7%, up from 2.6% in March. Analysts attribute the jump partly to residual effects from last year’s government shutdown, which delayed price data collection, causing a “catch-up” effect in shelter costs. Federal Reserve officials now face pressure to reconsider rate cuts, as traders slash bets for easing to just 10% chance, with a 33% probability of hikes by spring 2026. Citi economists note that core inflation’s rise stems more from data gaps than energy shocks, though oil prices remain a key inflation driver.

Japan’s ¥10tn ($60bn) yen intervention since April has stabilized the currency near ¥157, but analysts doubt long-term success without sustained Middle East de-escalation or tighter Bank of Japan policy. The UK economy shows mixed signals: Q1 GDP growth of 0.5-0.6% may buoy rate-hike expectations, though underlying data suggests lingering slack. Investors will watch March business spending data to gauge the war’s impact on consumer confidence and economic resilience.