Europeans face higher oil and gas prices until at least the end of 2027 as the fallout from the Iran war continues to drive inflation, EU officials have warned.
EU Economy Commissioner Valdis Dombrovskis said energy prices are now the main force pushing inflation higher, with forecasts rising to 3.1% this year and 2.4% in 2027.
That is a sharp increase from the previous forecast of 1.9% for this year. Dombrovskis said: “We expect that this energy inflation will gradually also trickle down to different sectors of the economy.”
European Central Bank President Christine Lagarde warned that even if the Middle East conflict ended now, delayed effects from higher energy costs would continue to push up goods prices.
She said: “It’s probably a fact that price levels will be higher at the end of this crisis, when we see the end of the crisis.”
Eurogroup President Kyriakos Pierrakakis said the EU would view the crisis as resolved only when free navigation through the Strait of Hormuz is restored without tolls.
The strait carries around a fifth of global oil and gas flows.
Pierrakakis said eurozone growth is now forecast at 0.9% this year and 1.2% in 2027, weaker than expected but “clearly far from a recession scenario.”
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