Charting the global economy: Inflation mounts as war drags on
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
US
The worst US inflation in years is once again eating away at Americans’ paychecks, as rising gasoline and grocery prices threaten to undermine household spending. Data out earlier this week underscored how the Iran war is reigniting inflation, straining consumers who were already frustrated by the high cost of living. After accounting for rising prices, wages declined in April from a year earlier — the first such drop since 2023.
The vast majority of Americans worried about high prices in 2025, and a growing share grew anxious about the job market too, according to an annual Federal Reserve survey. Amid near-zero job growth last year, 42% of adults reported that finding or keeping a job was either a minor or major concern, up from 37% in 2024.
Europe
UK government bonds tumbled after Manchester Mayor Andy Burnham secured a pathway to potentially challenge Keir Starmer as prime minister, threatening political instability that investors fear could result in more expansive fiscal policy. The yield on 30-year gilts, the most sensitive maturity to political risk, surged as much as 20 basis points to 5.86%, the highest since 1998.
French unemployment unexpectedly rose to the highest level in five years, adding to signs the euro area’s second largest economy was already on a weak footing when the Iran war began.
The UK kicked off the year with a burst of economic growth, with business and consumers appearing to hold up in the initial weeks of the Iran war. However, economists warned that growth is now at risk from the fallout from a Middle East conflict that shows no signs of ending and the prospect of a new prime minister.
The European Central Bank will raise interest rates twice this year as the Iran war drives inflation higher, a Bloomberg survey showed. Economists see quarter-point hikes in both June and September, aligning more closely with market expectations for at least two moves this year, according to the May 4-7 poll.
Asia
In South Korea’s $4.6 trillion stock market, signs of euphoria are popping up everywhere. Enthralled by a 200% surge over the past year that has far outpaced every other market on earth, locals are borrowing record sums to amplify their bets on stocks.
Japan’s 20-year government bond yield climbed, as elevated energy prices add to inflation pressure. Upward pressure on Japanese government bond yields is building as oil prices remain elevated after the US and Iran rejected each other’s proposals to end the conflict, dimming prospects for a near-term resolution.
China’s factory prices grew at the fastest pace since the pandemic four years ago as the fallout from the Iran war sharply raises costs and leaves profits under pressure. Though food prices slumped, consumer inflation unexpectedly climbed to 1.2% from a year earlier, surprising analysts who expected a slight slowdown.
India raised import tariffs on gold and silver in an attempt to defend its currency, as the country races to shore up foreign-exchange reserves and limit the damage from the war in the Middle East.
Emerging Markets
To Fidel Castro and Cuba’s communist elite, private businesses were totems of capitalist evil. Now, with the country running out of food and fuel, the regime on the brink and anger spreading in the streets, it’s those private businesses — run by once-persecuted, small-scale capitalists — that hold the key to salvaging what’s left of Cuba’s economy.
Russia’s economy contracted in the first quarter for the first time since the start of 2023, a setback for President Vladimir Putin’s demand for continued growth as he pursues the war in Ukraine. Gross domestic product shrank 0.2% in the first three months of the year from the same period a year earlier, according to Federal Statistics Service data.
World
The impact of the energy crisis on the global economy in recent months is showing up in gauges of supply-chain stress that flashed red during the pandemic, adding to reasons for central banks to be on guard for a recurrence of high inflation.
Zambia and Angola lowered interest rates, while Uganda, Peru and Romania left borrowing costs unchanged.
–With assistance from Irina Anghel, Ruchi Bhatia, Sangmi Cha, John Cheng, Julia Fanzeres, Nick Heubeck, William Horobin, Alice Gledhill, James Hirai, Harumi Ichikura, Yujing Liu, Mark Niquette, Catarina Saraiva, Zoe Schneeweiss, Preeti Soni, Yihui Xie, Charlotte Yang, Charlie Zhu, Brendan Murray and Jim Wyss.