30th June 2026
When oil prices surged following military action between the United States and Iran, many feared another inflation shock was about to hit. Yet, despite continuing tensions in the Middle East, oil prices have since eased, leaving many people wondering whether the threat has passed.
The answer may be no—but for a very different reason.
The next wave of inflation may not be driven by oil at all. Instead, it could come from a broad range of commodities that are becoming increasingly difficult to produce just as global demand is accelerating.
In many ways, the world economy is entering a new phase where everything from artificial intelligence to climate change and geopolitical tensions is placing pressure on the same raw materials.
Copper: The Metal Behind the AI Revolution
If there is one commodity to watch over the coming decade, it is copper.
Every new AI data centre requires vast amounts of electricity. Every expansion of the electricity grid requires copper cables. Electric vehicles use considerably more copper than traditional petrol or diesel cars. Wind turbines, solar farms, battery storage systems and military equipment all depend upon it.
Unlike software, however, copper cannot simply be created with another line of computer code.
Opening a new mine can take well over a decade. Environmental approvals have become more complex, investment has often been delayed, and many of the world's richest deposits have already been developed.
Demand is rising far faster than supply.
Many analysts now believe copper could become one of the defining commodities of this decade, with shortages becoming increasingly common unless significant new mining projects come online.
AI Has a Physical Appetite
Artificial intelligence is often viewed as something that exists entirely in the digital world.
In reality, AI consumes enormous quantities of physical resources.
Every new data centre requires:
steel
concrete
copper wiring
aluminium
cooling systems
electricity infrastructure
As governments and technology companies race to build AI capacity, demand for these materials continues to increase.
The digital economy, it turns out, depends heavily on the physical economy.
Gold Continues to Benefit From Uncertainty
While industrial metals are rising because of demand, gold is being supported for a different reason.
Investors remain concerned about geopolitical tensions, government borrowing, inflation and financial uncertainty.
Central banks have also been buying significant quantities of gold in recent years as they seek to diversify away from the US dollar.
Gold therefore continues to act as an insurance policy during uncertain times.
Chocolate and Coffee Tell Their Own Story
Commodity inflation is not limited to metals.
Many shoppers have already noticed the rising cost of chocolate.
Poor harvests in Ghana and Côte d'Ivoire, combined with crop disease and changing weather patterns, have dramatically reduced cocoa production.
Coffee has faced similar challenges after droughts in Brazil and adverse weather in Vietnam.
These are reminders that climate change is no longer simply an environmental issue. It is becoming an economic one.
Extreme weather increasingly affects food supplies, which eventually feeds through into supermarket prices.
Fertiliser: The Hidden Inflation Risk
One commodity rarely discussed outside farming circles is fertiliser.
Yet fertiliser prices influence almost every food product we buy.
Nitrogen fertiliser is produced using natural gas, meaning energy prices directly affect farming costs.
When fertiliser becomes expensive, farmers often reduce usage or delay purchases.
Lower fertiliser use can reduce crop yields, leading to higher food prices many months later.
The effects are slow to emerge but can last for several growing seasons.
The Energy Transition Comes With a Price
Governments around the world are investing heavily in renewable energy, electricity networks and battery storage.
While these investments are designed to reduce future dependence on fossil fuels, they also create enormous demand for copper, aluminium, nickel, lithium and rare earth minerals.
This creates an uncomfortable paradox.
The transition towards cleaner energy may itself contribute to inflation if the supply of critical minerals cannot keep pace with demand.
Building a greener economy requires huge quantities of materials before the long-term savings can be realised.
What Does This Mean for Britain?
The United Kingdom imports many of the raw materials used in manufacturing, construction and infrastructure.
If commodity prices continue rising, several sectors could feel the impact.
Major infrastructure projects—including new hospitals, schools, roads, electricity networks and housing developments—could become significantly more expensive.
Manufacturers may face higher production costs.
Builders could see continued pressure on material prices.
Consumers may encounter persistent increases in food and household costs even if petrol prices remain relatively stable.
This creates a difficult challenge for the Bank of England.
Inflation driven by commodity shortages cannot easily be solved by raising interest rates.
Higher borrowing costs do not produce more copper mines, larger cocoa harvests or additional electricity generation.
The Bigger Picture
For much of the past fifty years, oil has been viewed as the world's most important commodity.
That may no longer be true.
The defining commodities of the coming decade may instead be those required to power artificial intelligence, electrify transport, modernise national electricity grids and feed a growing global population under increasingly unpredictable climate conditions.
Copper may become the new oil.
Electricity may become the new strategic resource.
Food security may become just as important as energy security.
If that happens, inflation itself will begin to look very different from the inflation we have known in the past.
Oil prices may rise and fall with every geopolitical crisis.
But shortages of essential commodities could prove to be a far longer-lasting challenge.
That is why the next inflation wave may already be forming—even while oil prices are moving in the opposite direction.