7 Months Into the Iran War, the Oil Shock Is Showing Up in Europe's Inflation Reports

Spain’s harmonized inflation hit 5% in September, its highest level since February 2023. France and Poland also posted faster price growth, with energy costs leading the rise.

The readings land seven months after the Iran war began on February 28. They also arrive weeks after the European Central Bank (ECB) raised rates for a second time this year.

Fuel Leaves Its Inflation Mark on Europe

Spain’s national consumer price index rose 4.9% year on year, according to INE. The agency said vehicle fuel prices climbed this September after falling a year earlier, while package holiday prices dropped less than in 2025.

The harmonized rate beat the 4.9% median forecast in a Bloomberg survey. The reading pushes Spain further above the ECB’s 2% target, which Bloomberg said strengthens the case for more hikes. Meanwhile, core inflation rose to 3.1%, its highest since March 2024.

In France, harmonized inflation jumped to 3.4% from 2.6% in August, its fastest pace in more than two years. It also topped analyst estimates.

ALERTE – L'inflation grimpe à 3% sur un an en septembre en France, annonce l'Insee. Au plus haut depuis février 2024. pic.twitter.com/MHBKUbhC74

— Infos Françaises (@InfosFrancaises) September 30, 2026

Poland’s inflation climbed to 4.0% from 3.4%. That took it above the central bank’s 1.5% to 3.5% tolerance band for the first time since mid-2025.

Transport costs there had already risen 11.2% on higher fuel prices. The National Bank of Poland has held its benchmark at 3.75% since March, Bloomberg reported.

Germany publishes its national figure on Wednesday, and preliminary data from 5 key states point to an increase.

Hesse posted the highest regional reading, with inflation rising to 3.4% from 3.0%. North Rhine-Westphalia and Lower Saxony both climbed to 3.3% from 2.9%.

Bavaria rose to 3.2% from 2.9%, while Baden-Wuerttemberg reached 2.9% from 2.6%. Destatis President Ruth Brand tied August’s energy jump to the conflict.

“The rise in energy prices, caused primarily by the war in Iran, was particularly noticeable in the case of motor fuel prices,” Brand said.

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Rate Setters From Frankfurt to Sydney Reach for the Brake

The ECB lifted its deposit rate to 2.5% on September 10. President Christine Lagarde said policymakers are not committing to a set rate path.

As of September 29, ECB Watch data priced a 70% chance the ECB holds at 2.5% on October 29. Traders put the remaining 30% on a quarter-point hike to 2.75%.

The picture shifts for the December 17 meeting. A 2.75% deposit rate is the most likely outcome there, at 68.4%, while a move to 3% carries 28.8% odds.

Elsewhere, the Federal Reserve lifted rates on September 16, its first hike since 2023. The Reserve Bank of Australia followed on September 29, raising its cash rate to 4.6%, the highest since 2011. The bank said the Middle East conflict had widened, leaving energy prices well above its August forecasts.

Eurostat releases the eurozone flash estimate on Friday. August’s 3.3% reading was already the highest since September 2024, and the ECB’s next decision follows on October 29.

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