Forecasters See 6% Q1 Inflation as Iran Strikes Lift Energy Prices
Updated
Updated · CNBC · May 15
Forecasters See 6% Q1 Inflation as Iran Strikes Lift Energy Prices
3 articles · Updated · CNBC · May 15
A Federal Reserve Bank of Philadelphia survey now projects first-quarter CPI inflation at 6%, more than double the 2.7% estimate economists gave three months earlier.
U.S.-Israel attacks on Iran drove the revision by sending energy prices sharply higher, after April data already showed CPI at 3.8% and producer-price inflation at 6%, both multiyear highs.
For 2026, the panel raised its full-year CPI outlook to 3.5% and core CPI to 2.9%, with inflation staying elevated into the third quarter before easing only modestly by year-end.
PCE inflation, the Fed's preferred gauge, is also seen running hot at 4.5% headline and 3.4% core in the second quarter, complicating incoming Fed chair Kevin Warsh's stated preference for lower rates.
The same survey turned gloomier on growth, cutting 2026 GDP to 2.2%, seeing 2027 at 1.9%, and putting this year's unemployment rate at 4.5%.
As incoming Fed Chair Kevin Warsh challenges traditional inflation measures, could his new approach risk even greater market turmoil or help restore stability?
With the world's largest oil supply shock stranding thousands of vessels, how soon can Americans expect relief at the pump and grocery store?
The 2026 Energy Shock: Inflation, Stagflation Risks, and Global Fallout from the Strait of Hormuz Crisis
Overview
In early 2026, the global economy is facing a sharp inflation surge and energy crisis, mainly due to the US/Israel-Iran war and the closure of the Strait of Hormuz. This conflict has caused major geopolitical instability, directly disrupting global energy supplies. As a result, Gulf countries have cut oil output by 10 million barrels per day, about 10% of global demand, leading to soaring energy prices and widespread economic disruption in the US, Europe, and the UK. The supply shock is especially visible in higher natural gas prices in Europe, while the US benefits from its own energy production.