Inflation May Hit 4.2% As Iran War Hikes Oil Prices, OECD Warns

Source: Forbes

Headline inflation in the U.S. may hit 4.2% in 2026 as a result of the spike in global energy prices triggered by the ongoing U.S.-Israel war with Iran, the Organization for Economic Cooperation and Development warned on Thursday.

The OECD, an intergovernmental organization that includes 38 of the world’s top economies, released its interim economic outlook report, saying the war “will test the resilience of the global economy.” The report said while projected global GDP growth for 2026 remains unchanged at 2.9%, the spike in energy prices triggered by the closure of the Strait of Hormuz is “adding to inflationary pressures.” The OECD forecast showed U.S. headline inflation could hit 4.2% in 2026, while the G20 group of advanced economies could see the marker hit 4%.

This is a significant upward revision from the agency’s previous economic outlook report published in December, which projected U.S. inflation for 2026 at 3% and the G20 at 2.8%. The report said countries in Asia that are heavily reliant on energy imports from the Middle East will face the most “immediate risks,” but the consequences of the Strait of Hormuz’s shutdown is “likely to spread quickly given the global nature of energy markets.”

“In the United States, the impact of higher energy prices on inflation will more than offset the effect from the decline in effective tariff rates on imports, especially given that the initial tariff rate increases from the first half of 2025 have only been partially passed through to consumer prices,” the report said.




Read more: https://www.forbes.com/sites/siladityaray/2026/03/26/us-inflation-may-hit-42-this-year-due-to-oil-price-surge-from-iran-war-oecd-warns/