War Hits Global Economy: OECD Sees US Inflation at 4.2%, Global Inflation at 4%

Key Points

• OECD sees G20 inflation at 4% this year, up from 2.8% December forecast
• US inflation expected to reach 4.2% according to OECD
• Middle East conflict impacting energy prices and supply chains
• BOE warns of lasting inflation impact even if war ends

Full Details

The conflict in the Middle East is reviving the specter of inflation and hobbling the global economy just as it was showing signs of strengthening at the start of 2026, the OECD said in its updated outlook. The Paris-based organization sharply increased its inflation forecasts for major economies and now sees the average rate for the Group of 20 this year jumping to 4%, with an even higher pace in the US at 4.2%, rather than the 2.8% it predicted in December. The war's impact on energy prices and supply chains is driving the revised forecasts upward. German private-sector activity has already dropped as Iran war fuels inflation, while the BOE's Greene warns of lasting inflation impact even if the war ends. UK inflation remained at 3% in the weeks leading up to the Iran war escalation.