Eurozone Inflation Rises to 3% on Energy Costs

Eurozone inflation climbed to 3 percent in April, driven by surging energy costs linked to the ongoing Iran war, as economic growth remained sluggish, complicating decisions for European Central Bank policymakers.

The European Union statistical agency Eurostat reported Thursday that annual inflation across the 21 countries using the euro rose from 2.6 percent in March. Energy prices jumped 10.9 percent, propelled by crude oil trading above 120 dollars per barrel, more than double the roughly 73 dollars before the war erupted on February 28. Iran has blocked the Strait of Hormuz, a critical waterway that previously carried about 20 percent of the world's oil shipments from Persian Gulf producers to global markets. The disruption has rapidly pushed up prices at gas stations and for jet fuel.

Economic output in the eurozone expanded by just 0.1 percent in the first quarter compared to the previous three months, falling short of expectations. This mix of accelerating inflation and anemic growth, known as stagflation, presents a policy challenge for the ECB. The bank's benchmark interest rate has remained at 2 percent since June 2025, unchanged following its latest meeting Thursday...