US Fed says Iran war driving ‘moderate-to-strong’ inflation

Prices in the United States grew at a “moderate to strong pace” in recent weeks, largely driven by surging energy costs caused by the Iran war, the Federal Reserve says.

“Districts noted that energy-related costs tied to the conflict in the Middle East were the primary driver of inflationary pressures, with spillovers into shipping, packaging, groceries, and fertilizer,” the Fed says in its “beige book” survey of economic conditions in the United States.

The United States and Israel launched the war on Iran on February 28, plunging the region into turmoil as Tehran’s retaliatory attacks hit Washington’s regional allies and virtually blocked the Strait of Hormuz. The blockade of the vital waterway — which sees roughly a fifth of global oil and gas supplies pass through it under normal circumstances — has seen energy prices skyrocket and significantly disrupted supply chains.

The Fed’s beige book presents a national summary of information gathered by each of the US central bank’s 12 districts through interviews with key business contacts, economists and other sources.