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Why inflation is up
What the Iran war is doing to the economy, briefly explained.
Cameron Peters is a staff editor at Vox.
Welcome to The Logoff: The economic impact of the Iran war is becoming clearer.
What’s happening? On Friday, we learned that inflation climbed to 3.3 percent in March, almost 1 percentage point higher than it was in February and the quickest inflation has grown in nearly four years.
Unsurprisingly, consumers aren’t thrilled. New data from the University of Michigan, also released Friday, shows consumer sentiment from April under 50, its lowest point ever. It’s not even mid-April, so for now, those numbers are preliminary — but they point in a concerning direction.
What does Iran have to do with this? Shortly after the war began in late February, Iran closed the Strait of Hormuz, a crucial passage for oil and natural gas. It has remained largely closed ever since, driving gas prices over $4/gallon in the US and making many more goods, including food, more expensive.
Will the ceasefire fix prices? No. The ceasefire, while fragile, is holding. But despite President Donald Trump’s demands this week, there is no sign that it has led to the Strait reopening.
According to the BBC, four tankers, and only 19 total ships, have passed the Strait since the ceasefire was announced; under normal conditions, well over 100 ships transit the Strait each day.
Even under the most optimistic scenario where the Strait does reopen in the near future, it will take weeks, if not months, for the oil supply to rebound, oil markets expert Rory Johnston told Vox earlier this week.
What’s next? American and Iranian negotiating teams will meet in Pakistan this weekend to discuss a more permanent peace deal, which could provide the US economy with a needed reprieve. How that will go is anyone’s guess: On Friday, Trump issued another threat, writing on Truth Social that “The only reason [the Iranians] are alive today is to negotiate!”
And with that, it’s time to log off…
I always enjoy New York Magazine’s “Grub Street Diet,” where someone — a politician, a celebrity, a journalist — lays out a week of sometimes-eclectic culinary choices. Their latest features investigative reporter and author Patrick Radden Keefe, and you can read it here.
Have a good weekend and we’ll see you back here on Monday!
