Military action against Iran and the closure of the Strait of Hormuz

Euro area consumer prices are expected to rise 3.0% in 2026, up from the 1.9% projected in December 2025

ECB staff project euro area HICP inflation at 3.0% in 2026 and 2.5% in 2027, driven by energy, before returning to about 2% in 2028. Before the conflict (December 2025) they projected 1.9% for 2026.

For whom: Households, businesses and policy watchers in the euro area

Euro area · % · Calendar year 2026, until 31 Dec 2026

3.0% for 2026 · Author: ECB/Eurosystem staff · ECB staff macroeconomic projections for the euro area, September 2026 · issued 10 Sept 2026 · information cut-off 19 Aug 2026

Limits of what is known: The figures are the ECB/Eurosystem staff baseline, conditional on market-based energy price assumptions at each cut-off date; they are not a World Pulse model. Scenario values are the author's own illustrations without assigned probabilities. Differences between releases are the author's revisions, not measured causal effects of the event.

How the event leads to the consequence

Select a link to see who is affected, the delay and what could break the chain.

1. 1 · ImpactOil, gas and refined-fuel prices surgeObservation↓
2. 2 · MechanismEnergy feeds into headline inflation, then into transport and foodAuthor forecast↓
3. 3 · MechanismHigher energy costs erode real incomes and slow consumptionAuthor forecast↓
4. 4 · ConsequenceInflation of 3.0% in 2026 instead of 1.9%Author forecast

Scenarios

Conditional paths published by the author. The difference is shown against the baseline, in the same unit.

The author publishes scenario variants for 2027, not for 2026: the values below refer to 2027.

What it means for

Choosing a group changes only the explanation, not the forecast.

Expected then → expected now → what became known

Author releases for 2026

1. 18 Dec 20251.9% for 2026

   Eurosystem staff macroeconomic projections for the euro area, December 2025 · information cut-off 26 Nov 2025

2. 19 Mar 20262.6% for 2026

   ECB staff macroeconomic projections for the euro area, March 2026 · information cut-off 11 Mar 2026

   Reason: Author: "Compared with the December 2025 projections, the outlook for headline HICP inflation has been revised up by 0.7 percentage points for 2026, mainly owing to the energy component." The release ties the energy assumptions to the US-Israeli military action against Iran on 28 February and Iran's retaliation, after which oil and gas prices surged.

3. 11 Jun 20263.0% for 2026

   Eurosystem staff macroeconomic projections for the euro area, June 2026 · information cut-off 21 May 2026

   Reason: Author (paraphrased): revised up by 0.4 percentage points for 2026 versus March, from revisions to all components concentrated in the second half of 2026 — recent upside surprises for unprocessed food and core inflation, higher energy and food commodity price assumptions, and stronger expected effects of the war in the Middle East on non-energy components.

4. 10 Sept 20263.0% for 2026current

   ECB staff macroeconomic projections for the euro area, September 2026 · information cut-off 19 Aug 2026

   Reason: Unchanged at 3.0%: the author states the 2026 outlook is unrevised, with downward revisions to food offsetting upward revisions to energy inflation.

What became known

Outcome pending — data for 2026 has not been published yet

Outcome rule: Compare each forecast with the first published annual average from Eurostat prc_hicp_aind (euro area, all-items HICP, unit RCH_A_AVG) for the same period, geography and unit. Error = observed − forecast, in percentage points of the annual average rate. Later Eurostat revisions become new observations with vintage 'revised' and do not replace the first comparison. Rule abs-diff-v1. The 2025 comparison shown in version 1 is a retrospective reconstruction prepared on 2026-09-16 (both forecast and outcome were already public), not a pre-registered check; the basis of every comparison (registered check vs retrospective reconstruction) is derived mechanically from the archive versions. The Eurostat 2025 value was retrieved on 2026-09-16 (dataset update stamp 2026-02-06); the date of its first publication is not separately evidenced, and HICP annual averages are not routinely revised. · abs-diff-v1

Timeline

Forecasts, observations and versions of this analysis by date. Points are not connected — nothing is known between them.

Why it may not happen

• Energy prices could normalise faster than assumed

  In the author's milder scenario energy prices normalise more rapidly than in the baseline; inflation then moderates more quickly and undershoots 2% in 2027 and 2028 (1.9% in 2027).

  • ECB staff macroeconomic projections for the euro area, September 2026 · Box 4 — milder scenario description
  • ECB staff macroeconomic projections for the euro area, September 2026 · Box 4 — Alternative scenarios for the economic impact of the Middle East conflict, introduction
  • ECB staff macroeconomic projections for the euro area, September 2026 · Table 1 — Growth and inflation projections for the euro area, row 'HICP'; cells in reading order joined with ' | ' (columns per year: June 2026 baseline, September 2026 baseline, milder, adverse, severe)

• Oil prices have already fallen below the June assumptions

  By the September 2026 cut-off oil was assumed at USD 88 per barrel in Q3 2026, nearly 15% below the June assumption; lower oil prices partly dampened the upward revision to energy inflation, which rests on higher gas and electricity assumptions and refining margins.

  • ECB staff macroeconomic projections for the euro area, September 2026 · Box 2 — Technical assumptions, first paragraph
  • ECB staff macroeconomic projections for the euro area, September 2026 · Section 4 Prices and costs, revisions paragraph (energy sentence)

• Pass-through to food has been weaker than the author expected

  In September 2026 food inflation was revised down after weaker-than-expected outturns for food commodity prices and smaller indirect effects of the energy shock; this offset higher energy inflation and left the 2026 headline figure unchanged at 3.0%.

  • ECB staff macroeconomic projections for the euro area, September 2026 · Section 4 Prices and costs, revisions paragraph (Chart 9, panel a)
  • ECB staff macroeconomic projections for the euro area, September 2026 · Section 1 Overview, inflation paragraph

What to watch next

Next ECB staff projections: the Governing Council meets on 16–17 December 2026 (ECB calendar); projections are customarily published on the second day. The 2026 outcome comes from Eurostat's annual average (prc_hicp_aind), expected in early 2027; Eurostat's release date could not be verified.

Source: ECB Governing Council calendar; Eurostat prc_hicp_aind

Due 17 Dec 2026

Open the source

Sources

• ECB staff macroeconomic projections for the euro area, September 2026 · ECB staff

  published 10 Sept 2026 · retrieved 16 Sept 2026, 17:19 UTC

  • Section 1 Overview, inflation paragraph

    Overall, the baseline projections foresee HICP inflation picking up from 2.1% in 2025 to 3.0% in 2026 and then declining to 2.5% in 2027 and falling further to 2.1% in 2028. The outlook for headline HICP inflation in 2026 is unrevised, with downward revisions to the food component following significant downward surprises up to July, and notwithstanding some upward pressure from the effects of adverse weather, offsetting upward revisions to energy inflation.

  • Table 1 — Growth and inflation projections for the euro area, row 'HICP'; cells in reading order joined with ' | ' (columns per year: June 2026 baseline, September 2026 baseline, milder, adverse, severe)

    HICP | 2025 | 2.1 | 2.1 | 2026 | 3.0 | 3.0 | 2.9 | 3.1 | 3.3 | 2027 | 2.3 | 2.5 | 1.9 | 3.2 | 5.4 | 2028 | 2.0 | 2.1 | 1.8 | 2.3 | 3.2

  • Section 4 Prices and costs, revisions paragraph (Chart 9, panel a)

    Compared with the June 2026 projections, the outlook for headline HICP inflation has been revised up by 0.2 percentage points for 2027, and by 0.1 percentage points for 2028 (Chart 9, panel a). Downward revisions to food inflation are broadly offset by upward revisions to energy inflation in 2026, while over the course of 2027 higher energy inflation and, to a lesser extent, NEIG inflation, more than offset downward revisions to food inflation.[22]

  • Section 4 Prices and costs, revisions paragraph (energy sentence)

    Upward revisions to energy inflation, partly dampened by recent negative surprises owing to lower oil prices and lower oil price assumptions, are consistent with higher gas and electricity price assumptions, as well as higher refining margins.

  • Section 4 Prices and costs, energy inflation paragraph (Chart 6)

    Energy inflation is projected to peak at the end of 2026 at almost 15%, then to fall sharply in 2027 owing to negative base effects and lower energy commodity prices, and to rise again in 2028 with the introduction of ETS2 (Chart 6). The war in the Middle East has led to large increases in energy commodity prices (see Box 2), and uncertainty about its evolution remains sizeable. In addition, prices for refined transport fuels have increased by significantly more than crude oil prices as the global supply of refined fuels has declined owing to the closure of the Strait of Hormuz

  • Section 4 Prices and costs, revisions since December 2025 (Chart 9, panel b)

    The revisions since the December 2025 projections provide a more complete picture of the impact of the war in the Middle East, showing the expected unfolding of the energy shock (Chart 9, panel b). Since then headline inflation has been revised up substantially for 2026 and 2027 (by 1.1 percentage points and 0.7 percentage points respectively), reflecting the immediate effect on energy inflation and its delayed pass-through to non-energy components.

  • Section 1 Overview, first paragraph

    The euro area economy has been more resilient to the effects of the conflict in the Middle East than previously expected. Real GDP growth surprised on the upside in the second quarter of 2026 and short-term indicators point to robust growth in the near term as uncertainty recedes, confidence improves and the energy supply shock stemming from the Middle East conflict is assumed to gradually ease.

  • Box 4 — Alternative scenarios for the economic impact of the Middle East conflict, introduction

    The economic outlook for the euro area remains highly uncertain amid the ongoing conflict in the Middle East, the blockade of the Strait of Hormuz and continued volatility in energy prices. To illustrate this uncertainty, the baseline projections are complemented by updated versions of the three alternative scenarios contained in the June 2026 projections – a milder scenario, an adverse scenario and a severe scenario.

  • Box 4 — milder scenario description

    The milder scenario assumes that energy prices would normalise more rapidly than in the baseline. As a result, inflation would moderate more quickly, undershooting the 2% inflation target in 2027 and 2028, while GDP growth would be slightly stronger than in the baseline.

  • Box 4 — adverse scenario results (Table C, Chart D)

    In the adverse scenario, the shock leads to a persistent upward shift in energy prices, implying more prolonged inflationary pressures, while GDP growth is weakened in the short term. Real GDP growth drops below the baseline, to 1.1% in 2027, returning to 1.4% in 2028 as energy prices fall and uncertainty unwinds. HICP inflation would rise in this scenario to 3.1% in 2026 and remain elevated at 3.2% in 2027, before falling to 2.3% in 2028.

  • Box 4 — severe scenario results (Table C, Chart D)

    The severe scenario would imply a substantially more challenging macroeconomic environment, driven by stronger and more persistent commodity price shocks together with amplified indirect and second-round effects. Real GDP growth would be 0.8% in 2026, falling markedly to 0.4% in 2027, indicating prolonged weakness in activity. It would recover to 1.4% in 2028. Headline inflation would increase sharply, reaching 3.3% in 2026 and peaking at 5.4% in 2027.

  • Box 2 — Technical assumptions, first paragraph

    Compared with the June 2026 projections, the technical assumptions entail lower oil and farm gate prices, higher gas and electricity prices, a weaker euro, broadly unchanged interest rates and higher equity prices. Oil prices have declined and are assumed to average USD 88 per barrel in the third quarter of 2026, nearly 15% lower than assumed for that quarter in the June projections, but over 40% higher than in the December 2025 projections, reflecting the ongoing Middle East conflict. Gas prices, in contrast, have been revised up by 20% compared with the June projections and are at double the level assumed for the third quarter of 2026 in the December 2025 projections.

  • Footnote 1 (cut-off dates)

    The cut-off date for the technical assumptions and the global economy was 19 August 2026, and for the macroeconomic projections for the euro area it was 28 August 2026.

• Eurosystem staff macroeconomic projections for the euro area, June 2026 · Eurosystem staff

  published 11 Jun 2026 · retrieved 16 Sept 2026, 17:19 UTC

  • Table 1 — Growth and inflation projections for the euro area, row 'HICP'; cells in reading order joined with ' | ' (columns per year: March 2026 baseline, June 2026 baseline, milder, adverse, severe)

    HICP | 2025 | 2.1 | 2.1 | 2.1 | 2.1 | 2.1 | 2026 | 2.6 | 3.0 | 2.9 | 3.3 | 4.0 | 2027 | 2.0 | 2.3 | 1.8 | 3.0 | 5.3 | 2028 | 2.1 | 2.0 | 1.8 | 2.3 | 3.0

  • Section 4 Prices and costs, revisions paragraph

    Compared with the March 2026 projections, headline HICP inflation has been revised up by 0.4 percentage points for 2026 and 0.3 percentage points for 2027, while it has been revised down by 0.1 percentage points for 2028 (Chart 10, panel a). The upward revisions to headline inflation stem from revisions to all components and are concentrated in the second half of 2026 and the first half of 2027. The higher inflation profile is in line with recent upside surprises for unprocessed food and HICPX, higher energy and food commodity price assumptions and stronger expected effects of the war in the Middle East on the non-energy components.

  • Section 1 Overview, real economy paragraph

    Short-term indicators point to subdued economic growth in the near term, as higher energy prices and greater uncertainty weigh on domestic demand. In particular, as rising energy costs erode real disposable income and dampen consumer sentiment, household consumption growth – which was a key driver of growth in 2025 – is projected to slow considerably this year. Conditional on a relatively rapid resolution of the conflict and a related reduction in uncertainty, this weakness in private consumption growth is expected to be temporary.

  • Footnote 1 (cut-off dates)

    The cut-off date for the projections for the global economy was 20 May 2026, the cut-off date for the technical assumptions was 21 May 2026 and for the macroeconomic projections for the euro area it was 27 May 2026.

• ECB staff macroeconomic projections for the euro area, March 2026 · ECB staff

  published 19 Mar 2026 · retrieved 16 Sept 2026, 17:19 UTC

  • Box 2 — Technical assumptions, first paragraph

    Following the US-Israeli military action against Iran on 28 February and the subsequent retaliation by the Iranian regime, both oil and gas prices have surged amid considerable volatility. As a result, assumptions about prices for oil and gas for 2026 have been revised up by almost 30% and 57% respectively relative to the December 2025 projections (Chart A).

  • Section 1 Overview, inflation paragraph (final sentences)

    Overall, the baseline projections foresee HICP inflation picking up from 2.1% in 2025 to 2.6% in 2026, before declining to 2.0% in 2027 and then ticking up to 2.1% in 2028. Wage growth will moderate over the coming years, albeit at a slower pace than foreseen in previous projections on account of some inflation compensation effects related to the energy price shock. Compared with the December 2025 projections, the outlook for headline HICP inflation has been revised up by 0.7 percentage points for 2026, mainly owing to the energy component.

  • Footnote 1 (cut-off dates)

    The cut-off date for the technical assumptions of 11 March 2026 was two days before the finalisation of the projections, which is unusually close to the Governing Council’s monetary policy meeting, given the extraordinary geopolitical developments and the need to include information on the rapidly evolving situation.

• HICP - annual data (average index and rate of change), prc_hicp_aind — EA, CP00, RCH_A_AVG, 2024–2025 (JSON-stat) · Eurostat

  published 6 Feb 2026 · retrieved 16 Sept 2026, 17:19 UTC

  • JSON-stat top level: 'updated' and 'value' (value index 0 = 2024, 1 = 2025 per dimension.time.category.index); raw file content/raw/eurostat_prc_hicp_aind_EA_2024_2025.json — retrieved 2026-09-16; dataset update stamp 2026-02-06; first-publication date of the 2025 average not separately evidenced

    "updated":"2026-02-06T23:00:00+0100","value":{"0":2.4,"1":2.1},"id":["freq","unit","coicop","geo","time"],"size":[1,1,1,1,2]

    Terms: Eurostat data, free re-use with attribution; raw response sha256 c10ca728fa119412909e7311a67e5887e4c5a0ebdc2ec4c7a0dd6ff05ffe23eb

• Eurosystem staff macroeconomic projections for the euro area, December 2025 · Eurosystem staff

  published 18 Dec 2025 · retrieved 16 Sept 2026, 17:19 UTC

  • Section 1 Overview, inflation paragraph, first sentence

    Inflation is projected to decrease from 2.1% in 2025 to 1.9% in 2026 and then to 1.8% in 2027, before rising to the ECB’s medium-term target of 2% in 2028.

  • Footnote 1 (cut-off dates)

    The cut-off date for the technical assumptions and the projections for the global economy was 26 November 2025. The macroeconomic projections for the euro area were finalised on 3 December 2025.

• ECB staff macroeconomic projections for the euro area, September 2025 · ECB staff

  published 11 Sept 2025 · retrieved 16 Sept 2026, 17:19 UTC

  • Section 4 Prices and costs, first paragraph

    Headline inflation is expected to average 2.1% in 2025 and 1.7% in 2026, before edging up to 1.9% in 2027 (Chart 8).

  • Footnote 1 (cut-off dates)

    The cut-off date for the technical assumptions was 15 August 2025. The macroeconomic projections for the international environment and the euro area were finalised on 28 August 2025.