Inflation Wasn’t Defeated. It Was Reloading.
Back in January, standing before global leaders at Davos, Trump declared victory. Inflation, he said, was finished. Grocery prices, gas, mortgages, rent, car payments, all of it supposedly tumbling fast. Three months later, we are staring at a very different scoreboard.
The OECD now projects that we will finish 2026 with the worst inflation in the G7, at 4.2 percent. That puts us ahead of the UK, Germany, Canada, Italy, Japan, and France. We are the outlier, and not in a flattering way. For a country that spent the better part of two years clawing its way back from a 9.1 percent peak, this is a brutal backslide.
So what happened in ninety days? A war happened.
Since joint US and Israeli strikes on Iran kicked off on February 28, the Strait of Hormuz has been choked, oil infrastructure has been battered, and Brent crude has whipsawed between 92 and well over 100 dollars a barrel. On April 13, after peace talks collapsed, prices lurched past 100 again. The last time oil behaved this wildly, Nixon was in the White House. The International Energy Agency is calling it the largest supply disruption in the history of the global oil market.
We felt it at the pump almost instantly. March gas prices jumped 21.2 percent in a single month, the biggest monthly spike since 1967. That one number dragged headline inflation up to 3.3 percent year over year, breaking six straight months of calm readings. The Cleveland Fed now estimates April could land at 3.5 percent, the hottest since 2024.
Next comes the slower, quieter wave. Diesel surged alongside gasoline, and diesel is what moves groceries. Shipping companies will pass those costs to supermarkets, supermarkets will pass them to us, and the USDA already expects food prices to climb 3.6 percent this year, faster than the average for the past two decades. Fertilizer is another ticking clock. Its key components travel through the same Strait that is currently closed for business. Farmers in Iowa and Kansas are watching the nightly news with the same worry as families in Cairo and Karachi.
Now layer on the tariffs. Yale’s Budget Lab pegs the effective US tariff rate at 10.6 percent, the highest since World War II outside of last year’s rescinded batch. When Trump took office in January 2025, it sat at 2.3 percent. That difference shows up in cars, electronics, clothing, and roughly everything we buy that crosses a border.
The Federal Reserve is now boxed in. Rising prices argue for higher interest rates. A softening job market argues for cuts. Cleveland Fed President Beth Hammack has floated the possibility of another hike, something most of us thought was behind us. Consumer inflation expectations just jumped to 3.4 percent, the highest in years. That mindset matters, because once we start expecting higher prices, we start behaving in ways that make higher prices stick.
The global picture is grimmer still. Europe is bracing for stagflation, with Germany and Italy eyeing possible recession. Asia, which buys most of the oil flowing through Hormuz, is taking the hardest hit. Shell has warned of fuel shortages. Several developing economies are already rationing.
A third of our middle class was already struggling to afford food, housing, and child care before any of this started, according to Brookings. That was the baseline. Now pile on pricier gas, pricier groceries, pricier credit, and a Fed that cannot rescue us without feeding the fire.
Inflation was not defeated. It was waiting. And we are the ones paying the bill. Go beyond the headlines…
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