The war in Iran will lead to a surge in inflation this year, as the closure of the Strait of Hormuz pushes up prices for oil, gas and other commodities, the Organization for Economic Cooperation and Development said on Thursday.
The inflation rate in the United States will average 4.2 percent this year, more than 1 percentage point higher than the group’s previous forecast, made late last year, the Paris-based organization said. Across the Group of 20 nations, inflation is forecast to average 4 percent this year, 1.2 percentage points higher than previously expected.
The global economy is projected to grow by 2.9 percent this year, an unchanged forecast, supported by spending on artificial intelligence.
“The resilience of the global economy is now being tested,” the O.E.C.D. said in a report. There is a “significant” risk to its projections if there are persistent disruptions to exports from the Middle East.
For the past month, shipping through the Strait of Hormuz, a critical waterway off the southern coast of Iran, has plummeted because of attacks on ships. That, along with attacks on energy infrastructure across the Gulf region, has led to a sharp reduction in the supply of energy, as well as other goods such as fertilizers. That will push up the costs of food and other goods.
“Higher energy and fertilizer prices and the unpredictable nature of the evolving conflict in the Middle East will add to inflation and weigh on demand,” the O.E.C.D. said.
In the United States, growth momentum from the beginning of this year is expected to be offset by a slowdown in consumer spending. At the same time, the impact of higher energy prices will outweigh the effect from lower tariff rates on imports. The jump in inflation narrows the chances that the Federal Reserve will be able to cut interest rates this year.
Among the G20 countries, Britain is forecast to suffer the biggest hit to growth, in addition to a large increase in inflation.
The O.E.C.D. said central bankers needed to remain vigilant for signs that the energy shock could lead to a longer-term increase inflation, and lawmakers should respond to higher prices with “temporary and well-targeted measures” because of pressure on government budgets.
Eshe Nelson is a Times reporter based in London, covering economics and business news.
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