, Columnist
The Iran War Is Bad for Inflation — But Worse for Growth
Central bankers should be wary of a kneejerk reaction to rising energy costs.
Photographer: David Paul Morris/BloombergEven if the Iran conflict ends fairly soon, the world economy will suffer collateral damage. Energy-price increases may be the most visible effect, but how long they remain elevated will determine the extent of damage to supply chains — and how heavy the hit will be to global growth.
Consumer and business costs are already rising as crude shuttles either side of $100 per barrel; that's evident in German annual inflation coming in at 2.8% for March, the highest level for more than a year as energy prices climbed by 7.2%. More intractable problems like unemployment and falling investment take longer to filter through — but they’re coming.