Inflation Is Becoming Geopolitical Again

Amundi argues that markets are increasingly confronting a form of inflation driven less by domestic demand and more by geopolitical fragmentation and energy insecurity. 

• US producer-price inflation accelerated to 6% year-on-year in April, its highest level since late 2022, largely driven by rising energy costs linked to Middle East tensions.
• Treasury yields, particularly at the short end, moved sharply higher as markets repriced the possibility of prolonged inflation and fewer Federal Reserve rate cuts.
• Amundi sees the Strait of Hormuz as the critical variable: the longer disruptions persist, the greater the pass-through from energy costs into the real economy.
• The report also highlights an emerging policy dilemma for the Fed — balancing inflation control against weakening consumption and broader economic fragility.

The larger message is that inflation is no longer purely a monetary phenomenon. Energy chokepoints and geopolitical conflict are beginning to shape pricing dynamics directly.