The surge in global energy prices triggered by the West Asia conflict has begun appearing in March inflation data across major economies, Fitch Ratings warned in its latest quarterly economic monitor released on Wednesday.
Prices in major developed economies rose by an average of 0.8 percent month-on-month in March — the steepest monthly increase since 2022. The average rise in annual inflation across all markets was 0.3 percentage points, with the full impact yet to flow through to consumer prices, Fitch said.
Government bond yields rose across the board as investors priced in potential fiscal and monetary responses, though the rise in US 10-year yields has so far been relatively muted. Fuel price controls in some countries dampened the direct consumer price impact but are expected to strain government budgets.
Fitch’s analysis is based on its Fitch-20 Economic Monitor, which covers 20 major economies and tracks five years of high-frequency data across 20 variables.
The agency cautioned that the supply shock’s full transmission to consumer prices is still working through the system, suggesting further inflation pressure ahead as higher fuel costs ripple through supply chains.
For Sri Lanka, where the Central Bank has been monitoring inflation closely, the warning is significant. The country’s March CPI of 2.2 percent was measured before the worst of the price surge hit. Fitch’s analysis suggests April and May CPI readings could be materially higher as elevated oil prices and gas price hikes feed through to the broader economy. The IMF’s World Economic Outlook also flagged inflation risks at its Spring Meetings this week.
