Finance
Euro Zone Consumers Cut Inflation Outlook Before Iran War, ECB Survey Shows
Published by Global Banking & Finance Review®
Posted on March 27, 2026
1 min readLast updated: March 27, 2026
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Euro‑zone consumers trimmed their inflation expectations for the next 12 months and three years to 2.5% in March, before the U.S.–Israeli war on Iran drove energy prices higher and altered outlooks.
Euro Zone Inflation Expectations Fell Before Iran Conflict, ECB Survey Shows
ECB Survey Reveals Shifting Inflation Expectations Amid Geopolitical Tensions
Overview of Survey Findings
FRANKFURT, March 27 (Reuters) - Euro zone consumers were reducing their inflation expectations in the run-up to the U.S.-Israeli war on Iran, before a surge in energy prices fundamentally changed the outlook, a European Central Bank survey showed on Friday.
Short and Medium-Term Inflation Expectations
Median expectations for inflation over the next 12 months and three years ahead both declined to 2.5% from 2.6% last month, while inflation expectations for five years ahead remained unchanged at 2.3%, the ECB's Consumer Expectations Survey showed.
Timing of Survey Responses
However, 97% of the survey responses were collected before the war broke out on February 28, the ECB added.
Impact of Energy Prices and Updated ECB Projections
The ECB has since then sharply raised its inflation projections on surging energy costs, and a raft of surveys now indicate souring consumer expectations and surging prices.
The ECB sees inflation peaking above 3% under its most benign scenario while its adverse and severe scenarios see sharply higher and longer price surges.
Reporting Credits
(Reporting by Balazs Koranyi, Editing by Timothy Heritage)
Key Takeaways
- •Median 12‑month and 3‑year inflation expectations fell to 2.5% from 2.6%, five‑year unchanged at 2.3% (97% of responses pre‑Feb 28)
- •ECB has since raised inflation projections amid surging energy costs and risk scenarios show upside above 3% even in benign cases
- •Markets and ECB warn longer, more intense energy shocks could sharply raise inflation—severe scenario peaks near 4.8% by 2027
Frequently Asked Questions about Euro zone consumers cut inflation outlook before Iran war, ECB survey shows
1What did the ECB survey reveal about Euro zone inflation expectations?
The ECB survey showed that Euro zone consumers' inflation expectations declined to 2.5% for the next 12 months and three years, before recent geopolitical conflicts.
2How did the Iran conflict affect inflation outlook in the Euro zone?
The outbreak of the U.S.-Israeli war on Iran led to a rise in energy prices, prompting the ECB to raise its inflation projections.
3What was the inflation expectation for five years ahead according to the ECB?
The ECB's survey indicated that five-year inflation expectations remained unchanged at 2.3%.
4When were most survey responses collected relative to the Iran conflict?
97% of survey responses were collected before the war broke out on February 28.
5What are the ECB's current projections for inflation under different scenarios?
The ECB projects inflation peaking above 3% in its most benign scenario, while adverse and severe scenarios predict higher and longer-lasting price surges.