Germany: War-driven energy shock risks ECB hike – Commerzbank

Commerzbank’s Senior Economist Dr. Ralph Solveen notes that Germany’s inflation rate rose from 1.9% to 2.7% in March 2026 as energy prices surged due to the war in Iran, while core inflation stayed at 2.5%. He stresses that second-round effects are not yet visible but business surveys show rising price expectations. Commerzbank expects the ECB to respond with a 25 basis point rate hike in late April.

War impact lifts German price pressures

"The inflation rate in Germany jumped from 1.9% to 2.7% in March as energy prices rose sharply due to the war in Iran."

"However, the longer the war continues and causes energy and other raw materials to become more expensive or scarce, the more likely it is that underlying inflation will also pick up, as business surveys already suggest."

"As expected, energy prices – which have risen sharply due to the war in Iran – have driven up the German inflation rate (national definition)."

"Although there are no signs of second-round effects yet, this could change in the coming months, especially if the war in Iran continues and energy prices therefore remain high or even rise further."

"Then the core inflation rate is likely to pick up again both in Germany and across the euro area, forcing the ECB to decide whether to counter this trend with interest rate hikes."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)