The consensus reaction to the jump in oil prices following President Trump’s attack on Iran
on February 28 was that this would inevitably mean inflation. Steve Hanke and I responded
to this common fallacy by pointing out that oil and other commodity prices are relative
prices, while inflation requires a rise in the overall level of prices, which in turn requires prior
rapid growth of the broad money supply. Inflation may rise in 2026, but if so, it will be due to
excess money growth, not merely a rise in the price of oil.