Iran war raises Eurozone inflation to 2.5% in March

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The conflict in the Middle East and the closure of the Strait of Hormuz have driven energy prices up

Olatz Hernández

Tuesday, 31 March 2026, 13:19

The consequences of the war in Iran are already visible in inflation. According to provisional data Eurostat published on Tuesday, prices in the Eurozone rose to 2.5% in March due to increased energy costs, representing a 0.6% increase compared to the previous month.

The closure of the Strait of Hormuz, through which most of Europe's imported oil and gas pass, has caused energy prices to jump from -3.1% in February to 4.9% in just one month.

The impact has been particularly noticeable in energy-importing countries, such as Luxembourg, which saw its inflation rate jump from 1.8% to 3.8% in just one month. The highest rates were recorded in Lithuania and Croatia, at 4.5% and 4.7%, respectively. Spain is less affected by this crisis due to the significant role of renewables in its energy mix, but it has also experienced a slight increase, with prices rising from 2.5% to 3.3%.

Recently, president of the European Central Bank (ECB) Christine Lagarde stated that she will engage all of her efforts to fulfill the promise of her mandate to maintain inflation at 2% in the medium term. She has opened the door to raising interest rates if the impact of the crisis in Iran worsens. Although the ECB has not yet acted, awaiting further information on the impact of the conflict in the Middle East on prices, Lagarde said that indecision will not paralyse the ECB.

Lagarde stated that "there are reasons to remain vigilant", as demonstrated by the data published Tuesday by Eurostat. "If the current crisis remains contained in the energy markets, its impact on inflation could be limited. But if it intensifies or persists, the pass-through of inflation could accelerate," she warned.