The war drives up prices in Europe, with the Spanish state as one of the greatly affected.

BarcelonaThe armed conflict in the Middle East is already impacting European citizens' pockets. The cost of living during the month of March has soared in the eurozone, placing the annual inflation rate at 2.5%. This figure represents an acceleration of six tenths compared to February (1.9%), when prices had not yet been affected by the shortage of raw materials due to the closure of the Strait of Hormuz. The six-tenths rebound represents the largest jump in prices in the region since October 2022, when hydrocarbons skyrocketed due to the war between Russia and Ukraine.

According to provisional data published this Tuesday by Eurostat – the EU's statistical office – Spain, however, stands out as the largest economy in the eurozone with a higher price impact and moves away from the ECB's target, which aims to keep inflation around 2%. Specifically, in Spain, the increase in the cost of living compared to March 2025 stood at 3.3%, which is eight tenths more than in February (2.5%). Compared to other countries, Cyprus and Italy – both at 1.5% – and France – 1.9% – are the least affected countries by the price increase, while Croatia, Lithuania, and Luxembourg, at 4.7%, 4.5%, and 3.8% respectively, lead the growth in the eurozone.

Energy prices have been the main culprit for the sharp increase in the last month. In fact, while the inflation rate for these products was negative in February (-3.1%), it has soared in the eurozone this month, rising to 4.9% year-on-year. Services have also become more expensive, albeit to a lesser extent than in the year-on-year calculation last month (3.2%, compared to 3.4% in February), as have food, alcohol, and tobacco (2.4%, versus 2.5%) and non-energy industrial goods (0.5%, compared to 0.7%). This has moderated core inflation – which excludes energy and food – by one tenth in March, standing at 2.3%.

Above the target

Despite this highly focused increase, fuels have caused inflation to exceed the European Central Bank's (ECB) target of 2% for the first time since the beginning of the year. It should be recalled that last week, the bank's president, Christine Lagarde, assured that they would not hesitate to raise rates if prices were to remain comfortably and persistently above the target. Despite this, we will now have to see how prices evolve in the coming months: during March, experts already foresaw an increase in annual energy prices, as during this month of 2025 there was a sharp drop in the cost of fuels, creating what is known as the "base effect" – a distortion in the year-on-year inflation rate caused by how high or low prices were 12 months ago.

This context has already led several entities to revise their forecasts for 2026. Specifically, the ECB predicted an increase in inflation two weeks ago, when it revised its inflation forecast for 2026 upwards by eight tenths, to 2.6%, precisely taking into account a possible increase in the price of oil and gas in the event that the conflict in the Middle East drags on. For its part, last week, the Organisation for Economic Co-operation and Development (OECD) also revised its forecasts for the eurozone, and raised its inflation rate projections by 7 tenths, which it expects to be around 2.6% this year. For Spain, the entity forecasts an increase in the CPI of 3%, seven tenths higher than predicted in its last report.