EU warns of Middle East conflict that could lead to inflation rate exceeding 3%

The European Union warns that if the war in the Middle East causes Brent crude oil prices to remain around $100 per barrel and gasoline prices to remain high for a long time, the EU inflation rate may exceed 3% this year. EU Economic Affairs Commissioner Dombrovskis told EU finance ministers this week that the economic growth rate in 2026 may be 0.4 percentage points lower than the 1.4% predicted at the end of last year. Assuming that European natural gas prices remain at 75 euros per megawatt hour for the rest of this year, the inflation rate will be 0.7-1 percentage points higher than the previously predicted 2.1%. If inflation rises significantly, the European Central Bank may raise interest rates to respond. In addition, the impact of conflicts on financial markets, trade, and supply chains may further impact the economy.