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European Commission warns for risk of higher inflation as a result of Red Sea attacks

On 15 January, Iranian-backed Houthi militants fired an anti-ship ballistic missile from Houthi-controlled areas of Yemen and struck the M/V Gibraltar Eagle, a Marshall Islands-flagged, U.S.-owned and operated container ship, the U.S. military has announced. The ship has reportly no injuries or significant damage and is continuing its journey.

Earlier in the day, at approximately 2 p.m. (Sanaa time), U.S. Forces detected an anti-ship ballistic missile fired toward the Southern Red Sea commercial shipping lanes. The missile failed in flight and impacted on land in Yemen. There were no injuries or damage reported.

The European Commission has stated that in ‘coming weeks’, it fears rising inflation and energy prices, due to these Red Sea attacks. European Commissioner Paolo Gentiloni does not currently see energy prices or inflation rising due to the cutting of the important shipping route for merchant shipping, but that could well change. The attacks are hampering shipping on a waterway crucial to the global economy. Many freighters now make the diversions around Africa, which costs a lot of time and therefore money and can drive up prices.

He stated: “for now, this does not seem to have any impact on energy prices and inflation…But we think this should be closely monitored because these consequences could emerge in the coming weeks.”