Eurozone Defies Expectations as Iran War Fails to Spark Inflation

Six months into the Iran War, Europe's economy has surprisingly weathered the storm. Growth remains intact, and inflation hasn't taken off as expected.

The crisis has turned out to be less severe than the Ukraine invasion four years prior, with energy contributing significantly less to eurozone inflation, from 4% in July 2022 to less than a quarter of that today.

A key reason for this resilience is the delayed impact of higher wholesale gas prices on consumer goods and services. Energy-sensitive inflation tends to lag behind energy price changes by six months, and so far, it hasn't yet shown up.