The US Producer Price Index climbed 0.4% in August 2026, pushing the annual wholesale inflation rate to 5.4%. That’s up from 4.7% in July, and the culprit is exactly who you’d expect: energy prices supercharged by the ongoing US-Iran conflict.
Brent crude oil blew past $100 per barrel in early September, a level that looked like a relic of 2022 just a year ago. Gas prices have averaged over $4 per gallon across the US, squeezing consumers and businesses alike while handing the Federal Reserve yet another reason to lose sleep before its upcoming policy meeting.
What’s driving the spike
The US-Iran conflict, which escalated sharply with military strikes in late February 2026, has been the primary engine behind this inflationary wave. The Strait of Hormuz, that narrow chokepoint between Iran and the Arabian Peninsula, typically carries roughly 20% of global oil and gas supply. When tensions flare in that corridor, energy markets don’t wait around for diplomats to sort things out.
The conflict has involved coordinated US and Israeli military actions against Iranian targets, and each escalation has sent crude prices higher.
