Inflation Threatens Again as Oil Prices Rebound
The market is starting to become wary of inflation again after energy prices surged amid supply disruptions from the Middle East. The oil surge is not just about fuel costs, but also has the potential to spread to distribution, logistics, manufacturing, and household costs. Reuters reported that the Cleveland Fed nowcast estimates US headline inflation in April rose to 3.71% from 3.25% in March, while PCE is expected to rise to 3.58% from 3.28%. Interestingly, core inflation has been relatively stable, indicating that the main pressure currently comes from the energy sector.
This risk is made more serious because supply disruptions are not expected to resolve anytime soon. The IEA warned that oil supply disruptions from the Middle East will intensify in April, with supply losses said to be double those seen in March. Reuters also reported that more than 12 million barrels of supply have already been lost, and the impact is starting to be felt in Europe through shortages of diesel and jet fuel.
Price pressures are not limited to crude oil. Reuters reported that Saudi Aramco and Sonatrach raised official LPG selling prices in April by between 38% and 80%, indicating that the energy shock is beginning to spread more widely. If this situation persists, inflationary pressures could spread to the household and industrial sectors, as energy is a fundamental component of many production and transportation costs.
The impact is also beginning to be seen on growth prospects. In Germany, major economic institutions cut their 2026 growth projections to 0.6% from 1.3%, while raising their 2026 inflation projections to 2.8%. This means the market now faces a classic risk: growth weakens, but prices rise again.
For central banks, this situation is clearly uncomfortable. Reuters noted that many global central banks are now choosing to hold interest rates because wars and energy turmoil make the direction of inflation and growth difficult to predict. In other words, if the oil shock persists, the room for interest rate cuts could narrow, and risky borrowing costs could remain high for longer. (Zaf)
Source: Newsmaker.id
