La Jornada: World inflation accelerates due to the war in Iran: Bank of Payments

Moscow. Global inflation accelerated 0.5 percentage points since the start of the conflict in the Middle East at the end of February, according to an analysis by the Bank for International Settlements (BIS).

“There are already signs of an increase in inflationary pressures. Since the beginning of the conflict, the global consumer price index has accelerated by 0.5 percentage points,” indicate the institution’s economists.

Likewise, they warn that the prices of several raw materials registered double-digit increases. In particular, prices for plastics and fertilizers increased by around 50 percent.

Rising costs and shortages of key components can spread throughout production and supply chains, raising prices of other goods and reinforcing inflationary pressure on final products, analysts stress.

“Given time lags in production processes, rising costs in the early stages of the supply chain could continue to put upward pressure on inflation for a long time, even after energy supplies and oil prices normalize,” they predict.

Global markets suffered sharp falls and volatility following the temporary closure of the Strait of Hormuz, a crucial route for global trade in hydrocarbons and fertilizers, after the United States and Israel launched coordinated attacks against Iran on February 28, just 48 hours after concluding the third round of nuclear negotiations in Switzerland, to which Tehran responded with retaliation against Tel Aviv and Pentagon bases in several Gulf countries.

On June 17, the presidents of the United States and Iran, Donald Trump and Masud Pezeshkian, respectively, separately signed a memorandum of understanding that ends more than three months of hostilities between their countries and opens the way to negotiating a definitive agreement.

Washington undertakes to lift its naval blockade against Iran within 30 days, as well as withdraw its military forces once the final agreement is signed, which must be negotiated within a maximum of 60 days and be endorsed by a binding resolution of the United Nations Security Council. Iran will facilitate the safe transit of merchant ships through the Strait of Hormuz, free of charge for 60 days, and will engage in dialogue with Oman and the coastal countries of the Persian Gulf for the future administration and maritime services in this route.