Euro Zone Firms Expect Higher Prices, Costs Due to Iran War; ECB Notes Inflation Rise
Euro zone companies expect higher selling prices and input costs due to the Iran war, increasing inflation concerns for the ECB. Selling prices are projected to rise 3.5%, and input costs 5.8%. One-year inflation expectations also increased to 3%.
Euro zone companies anticipate significantly higher selling prices and input costs, attributing this to the Iran war, which intensifies inflation concerns for the European Central Bank (ECB).
Firms expect a 3.5 per cent increase in selling prices over the next 12 months, up from 2.9 per cent previously, according to the ECB’s latest survey on access to finance (SAFE). Projected input costs rose to 5.8 per cent from 3.6 per cent. The ECB noted that responses collected after February 28, when the conflict began, showed higher cost and price expectations.
One-year inflation expectations also rose markedly to 3 per cent from 2.6 per cent, while three and five-year expectations remained stable. This poll, conducted from February 19 to April 1, is a key factor for the ECB in assessing the Middle East conflict’s impact ahead of its interest rate decision. Wage expectations, however, moderated slightly to 2.8 per cent from 3.1 per cent.