Trump’s re-election may have helped Albanese – but the US war in Iran is creating economic conundrums

Resurgent inflation, already a factor before the Middle East conflict, now risks intensifying, creating a problem for the prime minister Follow our Australia news live blog for latest updates Get our breaking news email, free app or daily news podcast Donald Trump’s re-election helped Anthony Albanese win a landslide election, but now threatens to derail his second term of government, with the Labor government’s fortunes increasingly tethered to the US president’s policy agenda. Trump’s Middle East incursion triggered a huge spike in energy costs, propelling oil prices to their highest level in four years, as fears of a prolonged regional conflict took hold. An elevated oil price is a major global inflation trigger, given it drives up costs across goods and services in the economy, pushing central banks, including in Australia, to consider rate hikes to keep a lid on inflation. The resurgence of Australian inflation, already a factor before the Middle East conflict, now risks intensifying, creating a problem for the incumbent government. If interest rates move higher, as expected, many voters will be paying increased mortgage rates at the same time as they face elevated pri