War spurs global inflation fears as energy costs surge

The war in Iran is driving global inflation concerns as energy costs spiral.

Analysts told CNBC that eurozone inflation could rise 0.6 percentage points to 2.5% even if energy supply normalizes within four weeks, while inflation could hit 3% in the US and UK. Bond yields rose and fears of rising interest rates led UK lenders to withdraw 500 mortgage deals in the last two days.

The 2022 energy shock, when inflation hit 9%, is fresh in European policymakers’ minds, although a full-blown crisis could yet be averted: The post-pandemic global economy was “ripe for inflation,” an ING economist said in an investor note, with high government spending and fractured supply chains. Those things are “less true” today.