Annual inflation in the eurozone rose to 3% in April from 2.6% in March, with the squeeze driven by a 10.9% increase in energy prices as soaring oil prices from the Iran war pushed costs higher across Europe. The European Union statistical agency Eurostat reported the data Thursday, putting the burden of a geopolitical crisis and market panic squarely onto ordinary people paying more at gas stations and for jet fuel.
Who Pays for the Shock
Crude oil was trading above $120 per barrel, up from around $73 before the outbreak of the war on Feb. 28. The war was described as dealing a huge shock to the global economy because Iran has blocked the Strait of Hormuz, the waterway through which around 20% of the world’s oil formerly passed on its way to customers from producers in the Persian Gulf. The surge in oil prices has been quickly reflected at gas stations and in the price of jet fuel, where the costs of conflict and control over a chokepoint land on everyone else.
Eurozone growth for the first three months of the year increased by 0.1% over the previous quarter. That thin growth, paired with rising prices, fed concerns that inflation may become built into the economy along with slow or nonexistent growth, a policy conundrum dubbed stagflation. The phrase describes a system where the people at the bottom absorb higher costs while the institutions at the top search for ways to manage the fallout.
What the Central Bank Did
ECB policymakers left their benchmark interest rate unchanged Thursday even though the annual rate of inflation is now clearly above the bank’s target of 2%. The bank’s benchmark rate has been unchanged at 2% since June 2025. In Frankfurt, ECB President Christine Lagarde said at a post-decision news conference at the bank’s headquarters that the bank’s governing council had debated a rate rise Thursday. The council, she said, would revisit the bank’s stance with new information at the next meeting June 11 without committing to any particular path for rates.
That leaves the central bank in the familiar role of managing crisis from above while the costs continue to spread below. The rate decision came as inflation climbed, but the bank held its line rather than move immediately, keeping its benchmark rate fixed while prices keep biting into daily life.
Lagarde said the eurozone was not facing stagflation like that afflicting Western economies after the oil shocks of the 1970s. She said the situation today was not comparable, with inflation less ingrained and a stronger labor market supporting an economy that is not in recession. She said the term was “something that I park in the ‘70s... this is not something we’re seeing for the moment.” She also said, “We don’t apply that flashy term, ‘stagflation,’ to the circumstances that we have.”
The Language of Management
The bank’s language is one of control and reassurance, even as the figures show a tightening vise on households and workers. Lagarde’s comments came after the governing council debated a rate rise and before the next meeting June 11, where the same apparatus will again decide how to respond to a crisis it did not create but will help distribute. The eurozone, made up of the 21 countries that use the shared euro currency, is being steered through a shock shaped by war, oil, and central-bank caution.
Western economies suffered high inflation after twin oil shocks from the 1973 Arab oil embargo against the US and the 1979 Iranian revolution. That history hangs over the current moment as energy prices, central-bank policy, and geopolitical conflict combine to push the costs of instability onto the public while institutions debate terminology and timing from their headquarters.