Page 11 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

The S&P Global Materials Price Index (MPI) was reported to be nearly 40 % higher in mid-May 2026
compared with a year earlier, with inflationary pressures extending beyond energy into raw materials,
shipping, and industrial inputs.

Global manufacturing input costs rose sharply during April 2026, with the Global Manufacturing PMI Input
Prices Index recording its steepest increase since June 2022. Supply chain delays and shipping disruptions
significantly amplified inflationary pressures across manufacturing and services sectors
globally. Businesses across major economies also increased precautionary stock-building amid fears of
shortages and further price hikes, temporarily supporting manufacturing activity while adding additional
inflationary pressures.

Inflationary conditions were particularly severe in advanced economies. The United Kingdom recorded
the sharpest increase in input costs among major economies, while the Eurozone experienced a three-
year high in inflation. Japan also witnessed record-high price pressures according to PMI indicators. In the
United States, consumer inflation rose to 3.8 % in April 2026 — the highest level since May 2023 — while
producer prices and business input costs continued to accelerate.

The persistence of inflationary pressures is expected to keep central banks cautious on monetary easing.
Several central banks, particularly in Europe, are now expected to maintain tighter monetary policy
settings for longer than previously anticipated, while the US Federal Reserve is likely to delay interest rate
cuts until mid-2027.

Figure 1: Consumer price inflation (% annual change) -Actual and Forecasted

Source: S&P Global Market Intelligence Page | 10

May 2026