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Hi, welcome back to the channel. In today's episode I want to provide you with a further update on the impact on the global economy of the war in Iran because the latest data shows that things are getting significantly worse. Yesterday the US government released its official inflation data for April and the numbers are ugly. We're talking the highest inflation in three years, gasoline prices up nearly 30% year on year, electricity surging, food prices climbing, supply chains beginning to buckle in ways that are going to remind a lot of people of the Covid pandemic and now warnings of jet fuel shortages that could disrupt your summer travel plans. But here's the really important point and this is what I want to keep in mind throughout the whole of this video, this crisis hasn't been resolved. The Strait of Hormuz remains heavily disrupted, oil flows are still constrained, shipping costs remain elevated and the data we're looking at right now is almost certainly just the beginning of the problem not the end of it. And while the US figures are the main headline in today's story this is emphatically not just an American problem. From Europe to the UK to Canada to Australia the same pressures are building and we now have the April data for a number of major economies that tells a very consistent story. This is a global economic shock and we're going to go through the evidence in a moment but before we get into the numbers and the detail could I ask anybody that hasn't subscribed yet to please hit that subscribe button, really does help me with the algorithm and also puts a smile on my face and helps the channel grow. So let's get into those numbers. Yesterday the US Bureau of Labor Statistics released its consumer price index report for April 26. The headline number is 3.8% year-on-year inflation, the highest reading since May 2023. That's up from 3.3% in March and above forecasts of 3.7%. Now you might be sitting there thinking 3.8% that's not catastrophic but let me walk you through what's underneath that number because it tells a very different story. Energy prices jumped 17.9% year-on-year, the steepest annual rise since September 2022 and within that gasoline is up 28.4% year-on-year. The national average price is now $4.50 a gallon compared to $3.14 a year ago. That's almost a 50% increase since the war in Iran began at the end of February. Fuel oil is up a staggering 54.3% year-on-year and energy costs alone accounted for over 40% of the entire monthly CPI increase in April. So this isn't broad-based inflation driven by a booming economy, this is a geopolitical energy shock hitting households directly in the wallet every single time they fill up their vehicle and it doesn't stop at the pumps because when fuel prices go up everything that gets transported by road or air gets more expensive and that is basically everything. Food prices rose 3.2% year-on-year with grocery prices jumping 0.7% in a single month, the biggest single monthly increase since August 22. Beef prices are up 14.8% over the past 12 months and the mechanism here is very straightforward. Diesel prices push up trucking costs which push up food costs and that pipeline is already working. Housing costs rose 0.6% in April meaning this is no longer just a fuel story, inflation is broadening out and here's the number that perhaps hits hardest. Real average hourly wages, wages adjusted for inflation, fell 0.5% in April and are down 0.3% over the past 12 months. So even people receiving pay rises are effectively earning less in real terms, the cost of living is outrunning incomes. Mark Zandi, chief economist at Moody's put it plainly, American households are going to continue to struggle managing through this and that's going to be the case for the foreseeable future. Now important to those US figures are, America is far from alone and this is where the story gets considerably bigger. The euro zone has just released its April data and the numbers show exactly the same pattern. Euro area inflation jumped to 3% in April, the highest since September 23, up from 2.6% in March and the driver is unmistakable. Energy costs in the euro zone surged 10.9% in April, the sharpest annual increase since February 23, driven directly by the conflict in Iran. To put that into context, just two months ago in February before the war full impact had hit, euro zone energy prices were actually falling year on year, they are now up nearly 11%. This is an extraordinary turnaround in a very short space of time and you can see it in the individual country data. Germany, Europe's largest economy, saw inflation accelerate to 2.9% in April with energy costs jumping over 10% year on year. France hit 2.5%, up sharply from 2% in March. Italy hit 2.9%, up from 1.6% the previous month and Spain is now at 3.5%, the highest since the middle of 2024. Alongside that, euro zone GDP growth in the first quarter of this year came in at only 0.1%, essentially flat. So Europe is facing the combination that economists fear the most, inflation accelerating on one side and growth grinding to a near zero halt. The ECB has already postponed its planned interest rate cuts and raised its inflation forecasts and economists are now openly warning that energy intensive economies like Germany and Italy face a real risk of tipping into recession by the end of this year if the blockade persists. As for the UK, the April figures aren't released until next week but the most recent data shows UK inflation already running at 3.3% and heading higher, with motor fuel identified as the biggest single upward contributor. The Bank of England's own April monetary policy report warned that inflation is likely to rise further from here with household energy bills set for another squeeze when the off-gem price cap resets in July. One member of the Bank of England's monetary policy committee has already voted for a rate increase. The rest of the committee voted to hold but with the language around future decisions becoming noticeably more cautious. In Canada and Australia the story is similar. Fuel driven inflation building, growth forecasts being revised downwards and governments already having to respond. In Canada's case, federal fuel taxes have been suspended in an attempt to provide the sum relief. In Australia, fuel prices surged in March with some stations reporting shortages and panic buying as the supply chain sought from Asia began feeding through. That brings me to a number that captures just how broad this crisis has become. US electricity prices are now rising 61% faster than overall inflation. Electricity rose 6.1% year-on-year in April while overall inflation was only 3.8%. This isn't just about oil, the Iran war energy shock has driven up the cost of natural gas which generates a large chunk of electricity across the USA and Europe and that is landing on top of already strained power grids dealing with surging demand from AI data centers and electrification. For lower income households who spend a disproportionate share of their income on energy this is genuinely damaging. You can't cut back on heating, you can't cut back on refrigeration these are unavoidable costs hitting people who have the least room to absorb them. Now let's talk about supply chains because Bloomberg is reporting that gauges of global supply chain stress, the same gauges that went off the charts during Covid are heading sharply higher again. Supply chain disruption isn't just inconvenient it's inflationary in a way that is very hard to fix quickly. When goods can't move efficiently prices go up across the entire system. As we've discussed before the straight upper moose usually carries 20% of the world's oil and 20% of its liquefied natural gas. When that route is effectively closed as it is just now you don't just get an energy shock you get a logistic shock. Shipping routes are being rerouted, insurance costs on cargo are spiking, lead time on goods from Asia to Europe and North America are stretching out. The International Energy Agency has called this the largest supply chain disruption in the history of the global oil market. That is the world's leading energy watchdog not a headline writer. And then there's jet fuel because the Iran war has created what's being described as a jet fuel supply crunch, threatening to disrupt the summer travel season just as we're heading into the peak northern hemisphere holiday period. In the USA airline fares were up 2.8% in a single month and 20.7% year on year in April, one of the largest single increases since the entire CPI report system began. But again this is not a US only problem. Qantas in Australia, SAS in Scandinavia, Air New Zealand and India's two largest carriers Indigo and Air India have all announced airfare hikes, directly tightening the spike in jet fuel costs. Airlines are among the most fuel sensitive businesses on earth. Jet fuel makes up around 25% of an airline's operating cost. When oil prices spike 50% in two months, airlines face a stark choice, absorb the losses which many can't sustain or pass those costs on to passengers. And historically they nearly always pass them on. For ordinary people planning their summer holidays, whether you're in the UK, Europe, North America or Australia, the message is the same. It's going to cost significantly more than you budgeted for. And if your airline hasn't yet fully priced in this crisis, some fares could rise even further. Now all of this puts central banks in an extraordinary difficult position and that has huge implications for everyone with a mortgage, a loan or savings wherever you are in the world. Most major economies had only recently started cutting interest rates after several years of battling inflation. The Federal Reserve, the Bank of England, the ECB, the Bank of Canada and the Reserve Bank of Australia had all been moving towards easier monetary policy. But if inflation is now accelerating again, central banks become trapped. Do they continue cutting rates to support weakening economies or do they keep rates high or even raise them further to stop inflation spiralling out of control? Because here's the problem, this isn't demand driven inflation. You can't fix a closed straight up a moose with an interest rate rise but central banks cannot simply ignore 3.8% inflation in the US, 3% and rising in the eurozone and forecasts pointing to higher across the UK and beyond, all moving in the wrong direction at the same time. In the USA, markets have completely abandoned any expectation of interest rate cuts in 2026. Some traders are now pricing in a rate hike by the year end, that possibility sitting around 30% according to CME Group data. The ECB has already postponed its own cuts, the Bank of England is facing a similar dilemma. Think about what that means for mortgage holders, for businesses trying to refinance debt, for anyone who thought the era of high borrowing costs was finally behind us. The word economists have been very careful not to use is now being whispered in a lot of rooms, stagflation. Weak growth, rising inflation, central banks with their hands tied. Every significant oil price spike in modern history, 1973, 1978 and 2008 has been followed by some form of global recession. Economists are not yet calling this a recession but they are noting the parallels with increasing unease. Now let me take a step back and make the most important point of this video. Everything we've just discussed, the US inflation surge, the Eurozone hitting 3%, the supply chain stress, the airline disruption, the electricity squeeze, all of that is largely April data. It reflects barely two months of this wars economic impact. The Strait of Hormuz crisis began on 28th February, Iran closed the strait in retaliation for US and Israeli strikes, a conditional ceasefire was agreed on April 8th, but even now shipping through the strait is running at roughly 5% of pre-war levels. Before the war around 3,000 vessels used that route every single month. Today almost nothing is getting through. The US has launched a naval blockade of Iranian ports, the Iranian Revolutionary Guard has laid sea mines, 17 merchant ships have been damaged so far, the strait remains, for all practical purposes, closed. And that is not a tap you simply turn back on. The mines need clearing, insurance underwriters need to reinstate coverage, ship operators need to regain confidence, that takes weeks, potentially even months. Economists are telling us that even if a full resolution happened tomorrow, and there's absolutely no sign of that, it could take two to six months for supply chains to begin normalizing. The pessimistic scenario is six to nine months to get back to where we were at the start of 2026. And the other risk now being highlighted is what economists call second round inflation effects. Initially you get the direct shock from higher oil and energy prices, but over time those higher costs spread into wages, food, prices, transportation, manufacturing, retail, hospitality, and services. And once inflation becomes embedded across the whole economy, it becomes much harder for central banks to bring it back under control. This is exactly what policymakers are now worried about. The May figures, the June figures, they're going to reflect a situation that is still deteriorating. The April data is a lagging indicator. The full impact of oil above $100 a barrel hasn't finished working its way through the system yet. UK household energy bills haven't been reset yet. European gas storage heading into next winter still needs to be rebuilt. Unless there is a major de-escalation in the Middle East relatively soon, the economic risks continue to grow every single week. So to summarize where we are, in the United States inflation hit 3.8% in April, a three-year high. Gasoline is up 28.4%, fuel oil 54%, and real wages are falling. Electricity has risen 61% faster than overall inflation. Across the Eurozone, inflation jumped to 3% in April, the highest since 2023, with energy costs up nearly 11%. GDP growth virtually zero in the first quarter, and Germany, France, Italy, and Spain are all seeing inflation accelerate. Recession warnings are being issued for the bloc's largest economies. In the UK, inflation is already rising sharply. The Bank of England is on hold with rate hikes back on the table, and the worst of the household energy squeeze is still to come in July when the rates are reset. In Canada and Australia, fuel-driven inflation is building, growth forecasts have been cut, and governments have already started to intervene. Globally, supply chain stress gauges are heading back to Covid-era levels. A jet fuel crunch is threatening summer travel on every continent, and central banks across the world are caught between weak growth and rising inflation with very few good options. And the Strait of Hormuz is still essentially closed. We are nowhere near resolution. This is not the end of the story, this is the start of the problems. So I'll keep you posted on any further news and developments as and when they occur, but hopefully you found today's video useful, informative, and most importantly thought-provoking. If you've liked what I said, or maybe you didn't like it but you thought it was interesting, then please give me a thumbs up. Please subscribe to the channel if you haven't done so already. Don't forget I'm currently running my competition where you can win my property or a cash alternative prize. There's a very limited amount of time left now. Now I've been saying scan the QR code on the screen now in many of my videos, and I've had some messages from people saying how do you scan a QR code because I don't know how to do it. So in order to do that, get your phone and take a photo of the QR code. 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