The Iran war raised inflation fears, with Europe at particular risk.
Eurozone inflation hit 2.5% in March, the highest since January 2025; Germany’s rate also accelerated this month to its highest level in over a year, Spain reported rapid price increases, and the International Monetary Fund said Britain was “especially exposed” to fuel prices. Italy and France report inflation data this week.
The European Central Bank is considering raising rates, but analysts said the war could cause European stagflation as higher prices hit demand in a region already struggling for growth.
The US picture is somewhat better: Federal Reserve Chair Jerome Powell said policymakers were monitoring the data, but that longer-term expectations were “well anchored.”