Iran War Fuels Global Inflation Fears

Upcoming US inflation data will shed light on the economic impact of the conflict in Iran. Economists anticipate February's core personal consumption expenditures index to rise by 0.4%, mirroring January's figures. The headline inflation rate is also projected to increase. March data, due shortly after, will reveal further changes, with the consumer price index expected to jump significantly due to higher petrol prices.

Concerns are mounting over the sustained increase in oil prices, which have surpassed $100 a barrel and disrupted global supplies. Analysts suggest that the energy shock is already a certainty, with the primary question being the scale of its inflationary impact. This prolonged disruption to oil and vital input supplies is a major point of focus for global markets.

China's inflation figures will also offer insights into the conflict's effects on global manufacturing. While the consumer price index is expected to remain stable, producer prices may show their first positive annual gain since 2022. Higher energy prices could help China emerge from deflation, though near-term consumer price impacts may be softened by government measures.

The Eurozone faces potential currency pain as the euro has weakened against the dollar amid fears of an energy shock. Retail sales figures for February are anticipated to show a slight decrease, though they may not yet fully reflect the escalating oil and gas prices caused by the conflict in Iran.