Charting the global economy: Oil surge fans global inflation

Inflation pressures intensified across the global economy this week as surging energy costs from the Iran war continued to feed through to consumer and producer prices, raising the risk of slower growth and tighter monetary policy.

In the US, hotter-than-expected consumer inflation and the biggest monthly increase in producer prices since May bolstered the case for a Federal Reserve rate hike next week.

The energy shock helped revive inflation in China, kept Taiwan’s CPI above its central bank’s alert level and left policymakers with less room to cushion households and businesses. Growth signals were mixed in Europe, where Britain’s gross domestic product again beat forecasts even as German industrial production slumped.


Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:

Europe

Britain saw another month of strong growth in July, amid signs that artificial intelligence companies were starting to lift the economy. The figures marked the third month in a row that growth has outperformed economists’ predictions, a hint that the UK could defy expectations for a sharp slowdown in the second half of 2026.

German industrial production declined the most in almost a year, marking an unexpected setback to the recovery of Europe’s biggest economy. Output fell 1.1% in July, compared with a 0.2% gain predicted by economists in a Bloomberg survey. The drop was mainly due to reduced production in the automotive industry.

US

US consumer prices, excluding food and energy, rose by more than expected last month. The CPI suggests inflation made little progress toward the Fed’s goal last month amid ongoing pressures from the Iran war, tariffs and the data center buildout. Federal funds futures show investors priced in a rate hike next week as a near certainty following the release, and put a high likelihood on a second increase before the end of the year.

Treasury Secretary Scott Bessent keeps warning investors that they’re making a big mistake because he’s on the other side of the trade, armed with valuable information on government policy plans they don’t possess. But bond market investors are starting to bet against him. After Bessent rolled out an amped-up bond buyback Wednesday in a bid to push down benchmark 10-year Treasury yields, they shot up instead, extending a selloff that pushed them to a fresh three-year high of more than 4.9%.

A measure of producer price inflation showed renewed pressure from rising energy prices last month. The producer price index rose 0.4% in August from the prior month — the most since May — and 5.4% from a year earlier. Energy and transportation and warehousing costs surged after two months of declines, while several components that feed into the Fed’s preferred inflation gauge also posted strong advances.

Asia

Asia’s economies face a fresh test of resilience after oil crossed the $100 threshold again, with inflation running hot and fiscal and monetary policy already tight. The region relies heavily on imported energy, while gains in diesel and gasoline prices have outpaced crude, threatening to add to inflationary pressures and weigh on growth. Policymakers will face pressure to keep cushioning households and businesses, but their space to maneuver is much narrower than before.

China’s consumer inflation accelerated for the first time since April and factory-gate prices grew faster than expected, as more expensive food and energy revived cost pressures. Energy prices contributed 0.28 percentage point to the headline year-on-year gain for consumer inflation. Some food costs are also starting to pick up because of seasonal factors and weather conditions, with prices for fresh vegetables, eggs and pork rising in monthly terms.

Taiwan’s consumer inflation just topped the central bank’s alert level, a figure that may give it room to continue holding rates. The consumer price index rose 2.04% in August versus a year earlier. CPI was above the central bank’s 2% alert level for the fourth straight month, the longest stretch in two years. An official at the statistics bureau said higher prices were mainly focused on areas such as dining out and energy — an indication of the impact the Iran war is having on Taiwan’s economy even though the government is subsidizing state energy companies.

Emerging Markets

Mexico’s annual inflation rate rose less than forecast in August, providing central bankers scant respite but unlikely to alter their near-term plans to hold interest rates steady.

Chile’s central bank cut its forecast for economic growth this year for the third time, just hours after the institution held its interest rate steady and warned a period of malaise may continue for longer than expected. The economy will expand between just 0.25% and 0.75% in 2026, down from the prior forecast of 1% to 1.75%, according to the central bank’s quarterly monetary policy report.

World

Shipping nations are sounding the alarm over growing fragmentation in global trade as conflicts and trade tensions disrupt maritime supply chains. The turmoil has contributed to renewed volatility in shipping costs, with China-to-US container rates climbing to their highest since 2024.

In addition to the ECB and Chilean decisions, central bankers in Poland, Georgia, Serbia, Turkey, Peru, and Russia kept interest rates unchanged. Denmark followed the ECB with a hike to defend the krone’s peg to the euro.