Research by the European Central Bank has found that consumers across the euro zone have become more sensitive to economic shocks following the war involving Iran, raising concerns that the economic impact on Europe could be deeper and faster than previously expected.
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ECB economists said the conflict had revived fears linked to inflation and energy supply disruptions, similar to the effects experienced after Russia invaded Ukraine in 2022.
According to ECB researchers, consumers reacted quickly to rising uncertainty after the outbreak of the Iran conflict, despite inflation remaining close to the bank’s target level of around 2 percent.
Using data from the ECB’s Consumer Expectations Survey, economists including Olivier Coibion found that nearly half of surveyed consumers were closely monitoring price changes in March 2026, a level similar to early 2023 when euro area inflation had surged to 8.6 percent.
The researchers described the situation as a “double scar,” suggesting that memories of the earlier energy crisis caused by the Ukraine war are reinforcing public fears during the latest geopolitical turmoil.
They warned that repeated economic shocks could strengthen expectations of stagflation — a combination of rising prices and slowing economic growth — while increasing uncertainty around household spending and financial stability.
Oil prices, which play a major role in inflation across Europe, surged above $120 per barrel earlier this year amid fears of supply disruptions linked to the Iran conflict, although prices later eased on hopes of a possible peace agreement.
The ECB research suggested that growing consumer anxiety may complicate economic policymaking as the central bank prepares for its next monetary policy decisions, with markets expecting further interest rate increases.
