Iran-US Conflict to Fuel Inflation by 0.6% by Q1 2027: CBO

The Congressional Budget Office (CBO) has forecasted that the ongoing war between the US and Iran will push up the annual inflation rate by 0.6 percentage point by the first quarter of 2027.

The surge in energy prices due to the conflict is expected to cause a ripple effect, increasing the price of most goods and services as petroleum is a significant input in transporting them.

The CBO's report assumes that the per-barrel price of Brent crude oil will fall to $84 by the end of 2026 from $104.65 on Thursday, a 24% decline.

Fed Chair Kevin Warsh has said that policymakers unanimously approved a quarter-point increase in the federal funds rate mindful of a stubborn trend of inflation, strong US economic growth, and increased geopolitical risks.