Euro Zone Inflation Driven by Energy Supply Shocks

A recent study by the European Central Bank (ECB) has found that energy supply shocks are almost entirely responsible for the current rise in euro zone inflation. The research, published on September 1, 2026, compared the current period of high inflation with the one that followed Russia's full-scale invasion of Ukraine in 2022.

The analysis suggests that up to the end of May 2026, the current rise in headline inflation has been driven almost exclusively by adverse energy supply shocks. In contrast, the 2021-22 inflation episode was initially driven by monetary stimulus and later by fiscal stimulus.

The ECB's decision to raise interest rates for the first time in nearly three years aligns with its medium-term orientation and financial market expectations. Economists Kristina Barauskaite Griskeviciene and Claus Brand attribute the current rise in inflation to continued disruption to the Strait of Hormuz, which keeps gas and petrol prices elevated in the energy-importing euro zone.