Eurozone Inflation Increases to 3 Percent Amid Soaring Energy Prices

Inflation in the Eurozone increased to an estimated 3 percent in April, with rising energy costs being the main driver, according to Eurostat.

New data from the European Union’s statistical office, published on April 30, show that the annual inflation rate for the Euro area is expected to be 3 percent this month, up from 2.6 percent in March and up from 1.9 percent in February.

This is higher than the European Central Bank’s target of 2 percent.

Eurostat stated that energy was expected to have the highest annual rate in April at 10.9 percent—more than double the 5.1 percent in March.

This was followed by services (3 percent, compared to 3.2 percent in March); food, alcohol, and tobacco (2.5 percent, compared to 2.4 percent in March); and non-energy industrial goods (0.8 percent, compared to 0.5 percent in March).

The Eurozone is the economic region within the EU that makes up 21 of 27 member states that use the euro.

The Eurozone, which relies on energy imports, has been particularly affected by disruptions to oil, gas, and other shipments through the Strait of Hormuz, a critical route that handles approximately a fifth of the world’s oil traffic.

On April 29, German Chancellor Friedrich Merz said that his country and Europe more broadly were “suffering from the consequences” of the strait’s closure.

“This has a direct impact on our energy supply and a huge impact on our economic performance,” ​he said.

Last week, Germany’s economy ministry cut its growth forecasts ​in half for 2026, with Federal Minister for Economic Affairs and Energy Katherina Reiche saying that economic recovery will be “slowed down by external geopolitical shocks.”

The strategic waterways have remained virtually shut since early March following the start of the Iran war in late February.

On Thursday, oil prices hit a four-year high of $126.41 a barrel, before retreating, amid concerns that the conflict could escalate and further disrupt oil flows out of the Middle East.

Central Banks Hold Rates Steady

In separate data released on April 30, Eurostat stated that, in the first quarter of 2026, seasonally adjusted gross domestic product (GDP) increased by 0.1 percent in both the Eurozone and across the 27-member EU, down from the fourth quarter of 2025, when GDP grew by 0.2 percent in both regions.

“Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 0.8 percent in the euro area and by 1.0 percent in the EU in the first quarter of 2026, after +1.3 percent in the euro area and +1.4 percent in the EU in the previous quarter,” Eurostat said.

The data releases came ahead of the European Central Bank (ECB) announcing that it would hold interest rates steady, keeping the deposit rates—the rate of interest banks receive when they deposit money with the ECB overnight—at 2 percent.

The main refinancing operations rate—the rate at which banks pay when they borrow money from the ECB for one week—remains unchanged at 2.15 percent, while the marginal lending facility—the interest rate banks pay to the ECB when they borrow money overnight—is also held at 2.4 percent.

“The war in the Middle East has led to a sharp increase in energy prices, pushing up inflation and weighing on economic sentiment,” the ECB said in a statement.

The central bank stated that the implications of the conflict for economic activity and inflation “will depend on the intensity and duration of the energy price shock and the scale of its indirect and second-round effects.”

It noted that “the longer the war continues and the longer energy prices remain high, the stronger is the likely impact on broader inflation and the economy.”