Oxford Economics Warns of Inflation Risks Amplified by Iran Conflict

Oxford Economics Chief Economist Daniel Harenberg reported on May 13 that inflation driven by the Iran conflict is being exacerbated by a 'highly sensitive' corporate and consumer environment. According to Jin10, Harenberg noted that after years of economic shocks, businesses and households are now reacting more swiftly to inflation-related news, increasing the risk of price chain escalation. Harenberg stated, 'When market attention on inflation is high, companies react more strongly to inflation news and adjust prices more quickly; households are also more likely to revise their inflation expectations, leading to stronger wage increase demands.' Oxford Economics forecasts that this oil supply shock could raise inflation rates in major economies by an additional 0.6 to 0.7 percentage points in 2026, suggesting that global central banks may need to shift towards tighter monetary policy more significantly than current market expectations.