Economic analysts said that they fear the ongoing Red Sea attacks could lead to a rise in inflation as well as increased shipping rates after the Houthi movement said that it attacked the Greek-owned bulk carrier Zografia off the coast of Yemen January 16.

According to BBC News, Mohamed El-Erian, the former CEO of the American investment management firm PIMCO, warned that shipment disruptions caused by Houthi attacks could hinder global economic growth while causing shipping costs to increase.

"Relative to what would have happened otherwise, we will see higher inflation, higher mortgage rates and lower growth,” said Dr. El-Erian, the current president of Queens’ College, Cambridge and chief economic adviser of the financial services company Allianz. "In absolute terms, however, it is nothing compared to what we had in 2021 and 2022. This shock is not going to be as big but it is unfortunate."

Dr. El-Erian added that some peoples’ mortgage rates could increase if inflation grows or even fails to slow down in 2024.

Prior to the beginning of the conflict in the Middle East, between 12% and 15% of global trade traveled through the Red Sea via the Suez Canal and the Bab al-Mandab Strait. However, Iran-backed Houthi rebels began attacking commercial vessels traveling through the region late last year after the beginning of the Israel-Hamas war in October.

As attacks have ramped up, major shipping companies have begun re-routing their vessels around Africa’s Cape of Good Hope, which can add up to 18 travel days for some cargo.