Lengthy Iran war could cause inflation ‘spike’, warns ECB’s top economist

March 12,2026

Prolonged war in the Middle East and a persistent fall in oil and gas supplies from the region could cause a “substantial spike” in inflation and a “sharp drop in output” in the Eurozone, the European Central Bank’s chief economist has warned.

In an interview with the FT, Philip Lane said that “directionally, a jump in energy prices puts upward pressure on inflation, especially in the near term”, and that such a development would be “negative” for growth.

European gas prices shot up almost 50 per cent at one point on Monday, after Qatar halted liquefied natural gas production following strikes from Iran, which has come under attack from the US and Israel since Saturday.