Global inflation has been rebounding for months. India’s June print – 4.38%, up from 3.93% in May and above all forecasts – is not a shock out of nowhere. It’s the sharpest data point yet in a trend that began long before this week’s Gulf escalation and shows how bad it could get elsewhere if the conflict continues.
Look at the model first. India’s inflation has risen steadily since the beginning of the year: 2.75% in January, 3.40% in March, now 4.38%. Eurozone inflation reached 3.2% in May, its highest since September 2023 and comfortably above the European Central Bank’s target, before easing to 2.8% in June.
The OECD revised its inflation forecast for 2026 in the G20 to 4.0% from 2.8% previously, directly citing the disruption of shipping through the Strait of Hormuz. No one serious has declared victory over inflation this year. What has changed is the pace, and India just gave everyone the clearest reading yet of how fast that pace can move.
The reason India got there first is down to exposure, not fragility. The country imports 85% of its fuel and routes half of its crude oil, most of its liquid petroleum gas and most of its natural gas through the Strait of Hormuz, now an active conflict zone.
Oil price shocks reach India within weeks, showing up in oil prices, trucking costs and, eventually, food prices as those costs pass through the supply chain.
Most developed economies have more buffers: strategic reserves, diversified suppliers and currencies that absorb shocks better. But the tampon buys time, not immunity.
The eurozone’s own energy inflation, still at 8.7% in June, even after cooling from 10.8% in May, points to the same mechanism already at work in a richer and more isolated economy.
Brent crude is up more than 3% since the weekend, pushing toward $78 a barrel from recent lows near $70. Fighting resumed last week after a brief ceasefire in June. Any predictions built around that truce holding are now out of date – and many were, including some of the more optimistic calls for disinflation that came out of Europe earlier this summer.
Think of it as a streaming speed test. Every economy connected to Gulf energy will feel this shock eventually. The difference is how fast it arrives and how hard it goes down, and that comes down almost entirely to import dependency.
India, with 85% dependence on fuel imports and roughly half of its crude moving specifically through Hormuz, sits near the top of this list – which is precisely why its consumer price index moved first and most.
Economies with more diverse energy sources or larger reserves will see the same pressure build more slowly, but the direction is the same everywhere, as the fuel has to come from somewhere.
India’s central bank has already conceded this point, forecasting inflation of 5.1% for the next fiscal year, while signaling softer growth. This is an official admission that the assumption of a soft landing, based on previous predictions, did not survive contact with this conflict.
Most other central banks have yet to make that admission, but eurozone data is already moving in the same direction: energy costs did comparable damage there in May, just from a lower starting base and with more capacity to absorb it.
This has implications for how investors should read any further inflation pressures over the next month.
Energy-dependent emerging markets – Turkey, the Philippines, much of East Africa – are exposed to the same mechanism that India just demonstrated, and their currencies and bond markets are likely to revalue faster than anything in the developed world.
India’s June data is a direct template for what the repricing looks like before it spreads further. See what other emerging market currencies move in the next two weeks; this is the clearest signal available of how contained this stands versus how far it travels.
None of this is to say that panic is the right response. Supply shocks driven by geopolitics tend to fade once the underlying conflict is resolved, and historically, Gulf conflicts have been resolved more quickly than markets expect in the midst of a crisis.
But the assumption that inflation was a solved problem this summer was already wrong before the India press came out; Eurozone numbers said as much in May. India just showed how quickly a renewed war turns a sluggish trend into a sharp one for the most exposed economies first.
All those who still value developed market inflation as contained should treat this number as a possible preview of their next print run, not a footnote from a distant economy.
Nigel Green is CEO and founder of the deVere Group.
