Eurozone inflation reached 3% in April, more than a percentage point higher compared to February. From fuel and textiles to petrochemical products and even condoms, almost every sector of the economy is being affected by the new wave of price hikes.
The energy shock and initial industrial impact
Two months after the start of the Middle East war on February 28, costs have begun to skyrocket for major European enterprises. The Italian steelmaker Marcegaglia is recording additional costs of approximately €4 million per month, due to the doubling of natural gas prices, a 25% increase in maritime transport from Asia, and the rise in diesel. Emma Marcegaglia, head of the family multinational with 7,800 employees, notes that for now the impact remains limited, but warns that a prolonged conflict will completely change the situation.
Inflation returns to Europe
The European economy is already reflecting these pressures. Eurozone inflation rose from 1.9% in February to 3% in April. In France, the index strengthened from 1.1% to 2.5% in the same period. Michel Martinez, Chief European Economist at Société Générale CIB, estimates that the peak will come in September near 3.1%, pointing out, however, that forecasts are constantly being revised due to the duration of the conflict. He warns that a prolonged closure of the Strait of Hormuz would completely shift economic balances.
The "domino effect" of price hikes
The crisis is gradually being transmitted throughout the economic chain. The first effect is recorded in fuels, with gasoline in France being 19% more expensive and diesel by 31%. Subsequently, the increases pass into petrochemicals. The German giant BASF proceeded with price hikes of up to 30% on products such as amino acids used in detergents and cosmetics. This is followed by the chemical sector, where the company LANXESS recorded increases from 15% to as much as 50% in additives for tire production, while for some products, price hikes continue at a rate reaching even 50%. In industrial goods, UBS records increases of 5% to 20% in insulation materials, while companies are adjusting prices faster compared to the 2022–2023 period.
Passing costs to the consumer
The chain continues into final products. The British retailer Next estimates that a three-month crisis will increase its costs by £15 million, with a significant portion related to air freight. CEO Simon Wolfson warns that the burden will be passed on to prices. The food sector is also hit, as agriculture depends on fuel and fertilizers. Emmanuel Besnier, head of Lactalis, reports that the increased cost of transport and packaging will pass into prices. Even condoms are affected, with the company Karex announcing increases of 20% to 30% due to the rise in synthetic rubber.
Economic slowdown and limited price pass-through
In contrast to 2022, economic demand is weaker, a fact that limits the ability of businesses to fully pass on increases to consumers. Growth in the Eurozone in the first quarter of 2026 was limited to 0.1%, while in France, the economy remained stagnant. Alain Durré of Natixis estimates that the crisis may reduce growth by 0.4 percentage points and increase inflation by 0.5 points for the year as a whole.
Geopolitical prerequisites for stability
The baseline scenario for analysts is based on the reopening of the Strait of Hormuz by the end of June. Countries like Germany and Italy, with greater industrial dependence on energy, are expected to be hit harder, while France is considered more protected due to nuclear energy. Durré does not predict secondary inflationary effects, as the labor market is weaker compared to 2022, limiting pressures for wage increases.
1970s-style inflation
Despite the pressures, analysts do not see a repetition of a 1970s-style crisis. Paul Jackson of Invesco notes that for such an event to occur, oil would have to exceed $200 per barrel, which he considers unlikely. However, the final outcome depends not only on the markets but also on the political decisions of the parties involved in the Middle East.
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