Israel’s attacks on Iran have catapulted a long-running conflict into what could become a wider, more dangerous regional war and potentially drive prices higher for businesses and households in the U.S. and elsewhere, the Associated Press reports.
After years of high inflation in the aftermath of the COVID-19 pandemic, Americans have become increasingly leery about the economy this year due to President Donald Trump’s sweeping tariffs, though the impact so far has been muted. The latest escalation in the Middle East has the potential to cause widespread price increases that could set consumers back again.
Some of the sectors that could face an outsized impact from the escalation in the Middle East include energy, shipping, consumer goods and travel. The Federal Reserve may also be inclined to raise its benchmark rate, raising borrowing costs for businesses and consumers, if prices for gas, food and other essentials rises due to the Israel-Iran conflict.
