Biggest Euro-Zone Price Jump Since 2022 Seen in First G-20 Data
(Bloomberg) — The euro zone suffered the biggest inflation jump this month since Russia invaded Ukraine in 2022, according to economists assessing the fallout from war in the Middle East.
In the first batch of official data for all of March from Group-of-20 countries, consumer-price growth in the wake of the US attack on Iran is seen by forecasters to have surged by 0.7 percentage point.
That would put inflation at 2.6%, as shown by the median of 32 predictions compiled by Bloomberg. A measure which strips out energy and other volatile items is seen staying at 2.4%. The data will arrive on Tuesday after reports from the euro area’s biggest countries.
The last time the region experienced a bigger headline inflation spike was in the same month four years ago, after gas markets seized up as Russia attempted to take Kyiv. The increase then was notably bigger though, amounting to 1.5 percentage point.
Memories of that crisis, when the European Central Bank was slow to respond, have galvanized the resolve of policymakers to react faster this time if needed with an interest-rate increase as soon as next month. Peers in neighboring Norway are even more unsettled: officials there discussed an immediate hike this week, before opting to wait.
The uncertainties of the war mean that economists are having to game out a range of outcomes for inflation and policy in the coming months.
“A full-blown cost-of-living crisis appears unlikely in our baseline,” said Ludovic Subran, chief investment officer at Allianz. “Our downside scenario, with a prolonged conflict and higher energy prices for longer, will trigger at least three hikes by the ECB — and a technical recession.”
The jump in inflation would reveal the immediate hit suffered by euro-zone consumers from US President Donald Trump’s decision to start a war in the vicinity of one of the world’s pinch points for energy supply.
Despite the White House’s push for peace talks, hostilities continue, with Iran and Israel firing missiles at each other, and more attacks on Gulf states.
ECB President Christine Lagarde warned this week that damage to oil and gas facilities in the area will already take more than “a matter of months” to fix. On Friday, economist Nouriel Roubini observed that “even if the war ends tomorrow, oil prices aren’t going to go back to where they were before.”
Such impacts will keep policymakers watching household expectations to ensure wages don’t respond, rather than reacting to the initial cost hit.
“There is nothing that the ECB, or indeed any central bank, can do to offset the direct effect of energy on headline inflation and the impact that has on consumers,” said Katharine Neiss, chief European economist at PGIM.
The euro-zone inflation forecasts in the Bloomberg survey range from 2% — matching the ECB’s target — to 3.1%. The data release on Tuesday will be concurrent with that of Italy, where inflation is predicted to have ticked up to 1.8%.
What Bloomberg Economics Says:
“We expect euro-area inflation to accelerate to 2.5% in March from 1.9% in February. In addition, we expect the core figure to rise to 2.5% from 2.4%.”
David Powell, senior euro-area economist. To read more, click here
Before then, the region’s two biggest economies will publish data. Analysts reckon the German number on Monday will show a surge of 0.9 percentage point to 2.9%, while the French report early the following day is seen jumping 0.8 percentage points to 1.9%.
The inflation spike is likely to continue given the delayed nature of energy-price contracts feeding through to consumers. But the eventual scope remains tied to the duration and extent of the conflict, presenting policymakers with a whole spectrum of outcomes.
That’s why the ECB outlined potential scenarios at its March 19 decision, the worst of which envisaged an inflation peak of 6.3% in the first quarter of 2027. While elevated, that’s noticeably lower than the high point of the Ukraine crisis, when it exceeded 10%.
“Crucially, this is a pure energy spike, not a broad-based surge like 2022,” said Lea Dauphas, chief economist at TAC Economics in Paris.
Other countries neighboring the euro region will also release initial consumer-price readings in the coming week. In Poland, the inflation rate is seen jumping 1.1 percentage point to an nine-month high.
In Switzerland, which has struggled to generate price growth because of the strength of the franc, an acceleration to 0.5% on the national measure is predicted by economists. That would be the fastest since 2024.
–With assistance from Harumi Ichikura.
©2026 Bloomberg L.P.
