US inflation jumps to 3.8% as energy costs surge from Iran war

So while they might have incredible man power and manufacturing capability, everyone in that first battle will be seeing battle for the first time in their life.

A study a few years ago gave the US just 1 week before all its missiles were depleted with China in just a naval war.

I think Trump is about to lose patience with Iran again and we're in for a second phase of this war. What that looks like afterwards is anyone's guess. I'm not very optimistic.

It's not impossible that if the IRGC can't make payroll that things start to change from the inside, like what happened in Serbia. I'm not going to bet on that outcome though.

Until this year, US military bases were seen as an asset. They were thought to deter attacks, and in the case of someone being crazy enough to attack the country that hosted a US military base, they sold the promise of a quick and decisive response.

But for countries in the Middle East, every base was nothing but a liability with nothing but a long list of detriments. The bases got attacked and destroyed with basically zero effort whatsoever, local militaries had to step up to defend the US bases on their own dime and with their own people putting their lives on the line, and the bases basically just served as provocation and ended up with the countries being attacked as "punishment" for letting the US military operate on their land. And the US put in the bare minimum effort, if any, to defend the countries being attacked. It was basically "that's on you. Buzz off".

Europe is now being threatened with having their US bases cut back/removed entirely and I'm not sure if people are even worried anymore. People have been using the term "paper tiger" to refer to Russia these past 4 years because their efforts at war have been absolutely embarrassing. Somehow the US has made Russia look competent, and despite being against all the BS America did in Vietnam, Iraq, Afghanistan, etc, I didn't think America would somehow show itself to be more rotted out from the inside than Russia. I always assumed the US was competent, albeit war hungry. But somehow competence has completely vanished.

And right now, East Asian allies of the US operate under the very wrong assumption that the US will back them up if China/Russia/North Korea tries something. And now that those countries know the US won't do shit, there's a non zero chance that they've taken war plans from purely hypothetical plans to "we could actually do this" plans.

There is a ready list of American and European IRGC sympathizers. They would rather have the status quo of the Carter disaster than to give a green light to a no-RoE takeover of Iran.

Deny (or strip) them clearances, access to intelligence, and/or influence over defense policy.

https://www.ft.com/content/2e0185d1-3229-463c-8391-6dd09fe11...

Then the causal chain is War in Iran -> Oil Price increase -> Inflation & Fed Rate fears -> Treasury sell-off. Geopolitical risk creates inflation shock, and if bonds sell off on war news, their utility as a portfolio hedge weakens, and capital holders start looking for new assets (stocks and property). Also, the exodus from bonds first results in a pile of sidelined capital whose eventual rotation into stocks and property and gold leads to more market instability down the road.

Also, Russian and Iranian windfall oil profits are up along with those of Exxon, Chevron, Shell etc., the arms producers like Lockheed are booming, and for some reason, ‘prediction markets’ (gambling interests) also:

https://vestedfinance.com/blog/us-stocks/who-made-money-from...

I wouldn't jump to conclusions yet. The war is not over. I wouldn't even be so sure as to say Iran is in a good place right now.

Iran can absorb more pain than the US, but even that has a deadline. For the US, the only pain is inflation, which is more a matter of political capital than anything tangible. Trump is a lame duck president so I think he's more than happy to spend his political capital on this.

It's different for Iran. The main concern with a prolonged conflict is a lack of oil storage space. Once the tanks are full you have to cap the wells which is nigh disastrous for Iran because of the cost and difficulty of reactivating those wells later on.

To be clear, I'm not saying the US is going to come out victorious. But war is complex and it's a folly to predict any outcomes this early on.

Obviously it's not NET positive, but if I had to highlight one positive for the US from their perspective, setting most of our guided munitions on fire overnight breaks the military, and the suspicion is that it breaks the military at a time when China is not quite yet prepared to invade Taiwan. It is now in a widely acknowledged catastrophic munitions stockpile crisis which Congress will have to fix via large, sustained investment; Increasing procurement rates for many systems by an order of magnitude on the low end. A year ago, and 10 years ago, and 25 years ago, it was in a severe munitions stockpile crisis according to everyone who's ever ran a wargame or tried to figure out deterrence policy for a non-nuclear shooting war

After the Cold War, we basically reduced most munitions stockpiles to a level consistent with a Desert Storm scale operation, but kept paying exorbitant amounts of money to keep defense contractors technically alive, producing a handful of units a year at costs that pay for the overhead of existing. In areas like naval procurement, the contradictions entailed by this approach combined with neoliberal austerity posturing and a lackadaisical response to delays, have combined to turn almost every major shipbuilding effort since the Cold War into an expensive failure. We are spending a remarkable amount of money on military equipment and probably getting 5% of what we would get if we spent twice that much and emphasized industrial performance rather than contractor sustainment.

A year ago, Congress and the Pentagon were carefully ignoring this for political reasons, while the MIC & foreign policy blob believes China was looking at it as an opportunity.

Well, European partners are looking, too - and they are drawing logical conclusions, such as producing more interceptors locally rather than wait years for the first batches of PAC-3.

(Once ICE cars fall below a certain percentage, they will have structural disadvantages to EVs because ICE engines are so expensive to design.)

The stock market did, which is amazing if you're the top 10% of asset owners who own 50% of the country's wealth.

>except Russia by heaping sky rocketing energy costs on them

Russia doesn't benefit from this energy spike, since its biggest customers, China and India, have long term contracts that Russia can't just rip and renegotiate to charge spot prices, since they're in a pickle right now and depend on imports to keep the war going while not being able to sell to too many nations so they're stuck watching potential earnings go past them.

Whether or not you believe the United States' leaders, whether or not you think there was a better way for them to achieve their goals (something something Obama deal) is up for debate. But it's very facetious to say you "can't think of a single way in which the United States came out ahead in the war," when the United States' leaders have been publicly announcing it for nearly a year.

The other interesting part in that article is that excluding fuel and food still shows 2.8% inflation - only 1% attributable to food and fuel. Makes it seem like the main article and this article have different spins.

Edit: Wow people are jumping on this. The point is that food and fuel increases account for about 26% of the overall inflation number, meaning that the bulk of inflation is not related directly to fuel. The original article makes it it seem different.

Did I get it right?

It'll be better now, they killed the dad/wife/son/etc. of their new leader, this will 100% make them eager to negociate in good terms

Trump took a high risk gamble, that he would destabilize Iran and the people would overthrow the remnants. That didn't happen, and now Iran gets to inflict severe pain on the US.

I myself am delighted though, because everyone needs to get the fuck off oil, even if it's economically painful for a few years.

What did Bush / Obama / Biden do?

For example, your store might be competing for business using the headline price of eggs and making it up on milk and bread. In our city, Whole Foods was the cheapest non-warehouse place to buy eggs for a while. Anecdotally, it looks like one could save a relatively large % on various goods simply by going to a different store, which was not the case a few short years ago.

Relative pricing stability appears to have collapsed, shopping is more intellectually-intensive now.

You are on HN, the chance you are part of the american average is very low.

That 15% cost is not relevant if you don't drink milk. Its also a lot less if you are able to save money. That money saved might be for something very specific like one specific car or a house.

The house market, as far as i understand it, is more decoupled from inflation than not. Here in germany a farm costs still 600k and goes up and down based on location and other factors. My money in the bank doesn't has to be inflation neutral, it should be house market neutral for the money i only want to buy a house for.

You can also choose and change your buying power. Instead of the sports car x, you can buy y. Instead of buying the city center house, you can buy the farm outside.

They apply random multipliers to many products to account for "quality" and "performance", it completely skew the numbers and doesn't reflect the life of most people.

They even give you an example showing how the same car but with 3 more speeds, "smartphone integration" and "keyless entry" should be 3.6% inflation but actually counts as 0.6%

Same for computers, mobiles, etc.

https://www.bls.gov/cpi/quality-adjustment/vehicles.htm

https://www.bls.gov/cpi/factsheets/wireless-telephone-servic...

https://www.bls.gov/cpi/factsheets/personal-computers.htm

Stocks (naturally) price in inflation before inflation becomes headlines everywhere. People uncertain about the dollar trying to shelter their wealth from inflation will move to stocks to shield themselves.

Consumer Price Index (CPI) vs Core CPI

The above link is a little dumb because their own graph only goes up to March. But it looks like in March Core CPI was 2.6% while CPI was 3.3%.

Still, the details are in the text:

> Excluding volatile food and energy costs, so-called consumer core prices rose 0.4% last month from March and 2.8% from April 2025

But they are, ha ha.

I've seen reporting that energy prices won't return to pre-war levels this calendar year, even assuming an immediate return to the status quo basically right now (which seems unlikely).

I find the whole thing really confusing. The facts I can see with my own eyes suggest high inflation and this surely means no substantial rate cuts (which... the market has expected) if not reduced consumer spending and risk of recessions.

But the markets think everything is... fine? So... what are we missing here?

Yes. Bigger national and state stockpiles because the US can afford it, and many companies within the US can afford to pay for better futures contracts with suppliers that guarantee a future price in exchange for upfront payment that many poorer countries can’t afford because they have more immediate needs.

The USA is responsible for this horrendes situation, the USA people will not be the people struggling and dying.

Its the poor people in every country around the globe which literaly will die, while the rich countries will just continue doing whatever they were doing.

Holidays, traveling to visit famiily and friends. It will cost more for sure but you will still do it.

The poor can't afford the food anymore because cooking becomes more expensive. going to your daily job becomes more expensive. The likelyhood of people is getting destroyed beecause the small jobs, the niche jobs are suddenly uprooted. Like the small tuktuk or the cheap and dangerous bus for 6 people is too expensive suddenly.

We’ve had $4 gas before (20 years ago?!) and it was annoying but it didn’t end the world.

    a lot of people like it. 

I think the US has been ramping up domestic oil production for a while, creating an interesting situation where (global) prices are high but (domestic) supply is healthy. Prices are up at the pump in the US, but I'm not sure how much of that OPEC+ price-fixing or "risk premium".

isn't correct. There are plenty of people on HN working in military contract industries, high tech arms manufacturing and such. They lobby Gov and benefit financially as do their employees.