Will the same causes produce the same effects? In other words, will the war in Iran and the resulting surge in oil and gas prices lead to an inflationary shock comparable to that seen in 2022? Will their negative effects on growth be the same as those for the war in Ukraine and the subsequent energy shock? Although there are similarities, there are many uncertainties.
The ongoing energy-led inflation rise should be less strong, as demand is less dynamic and supply is less constrained today compared with the situation in 2022. Conditions do not appear to be conducive to a significant propagation of the rise in energy prices. However this will need to be closely monitored as transmission lags matter, and the return to normal oil production flows will take time while the strait of Hormuz remains blocked.
In addition, central banks have learned from the inflationary shock of 2021–2023. They are ready to react more quickly to counter any spillovers, second-round effects and spiral between price increases, inflation expectations and wages. Such second-round effects are not yet visible in the data, but central banks are on alert of any warning signs.
We have selected a set of indicators to track the impact of this new energy shock — caused by the war in the Middle East — on activity and prices in the Eurozone, the United States, oil and gas markets and emerging countries, and to see how much the current situation resembles that of 2022 at the outbreak of the conflict in Ukraine.
This dashboard featuring charts and comments will be updated on a monthly basis for as long as necessary.
