The unequal burden of oil shocks: Labour markets and monetary policy in World Economy News 15/06/2026 The war in Iran has sent oil prices sharply higher, reviving the question of who bears the cost of energy shocks and how central banks should respond. Using nearly half a century of German data, this column shows that oil supply shocks disproportionately impact low earners, reducing their labour income and their chances of finding and keeping a job. The central bank’s moderate response to past oil shocks added little to this real damage, even as it held down inflation. With energy-driven inflation back on the agenda, the results caution against a return to the wait-and-see approach that proved costly in 2021-22. Since the beginning of the Iran war in February 2026, the world economy has experienced a sharp surge in the price of oil that reached almost 120$ per barrel in March. Although prices have since given back much of that increase amid hopes of a lasting ceasefire, they remain well above their pre-war level, and the question of how forcefully central banks should respond to the inflationary impulse is once again live. While the recent oil price shock was unusually large, it follows a decade of volatile commodity markets marked by the COVID-19 pandemic and Russia’s invasion of Ukraine. This surge in commodity price volatility has put the study of effects of supply-side shocks at the top of macroeconomists’ to-do lists. And we have indeed seen much progress in identifying the effects of, in particular, oil shocks on inflation and output (Känzig 2021, Kilian 2024). Moreover, a rapid response to the current episode has already begun to quantify its inflationary fallout (Kilian et al. 2026) and to show why geopolitically driven oil shocks bite harder than ordinary ones (Verduzco-Bustos and Zanetti 2026). Beyond the observed effects of supply shocks on the macroeconomy, however, policymakers may also be interested in two additional features of their transmission. The