The European Central Bank's Consumer Expectations Survey released on Friday finds that successive geopolitical shocks have amplified household worries about a stagflation-like mix of higher prices and weaker growth. According to the March 2026 survey, the outbreak of war in Iran in February led to marked upward revisions in inflation expectations and downward revisions in growth expectations.
Survey data show that mean inflation expectations rose by roughly 2.5 percentage points following the February Iran conflict, while mean growth expectations fell by about 1.2 percentage points. Over the same interval, the median inflation expectation moved up by 1.5 percentage points. The analysis was prepared by researchers including Olivier Coibion from the University of Texas and Dimitris Georgarakos from the ECB.
The report directly compares household reactions to the 2022 invasion of Ukraine with responses to the Iran conflict in 2026. It finds that consumers who experienced the earlier period of elevated inflation remain particularly responsive to new geopolitical developments, suggesting that prior exposure has left a persistent imprint on expectations.
Looking at medium-term views, three-year-ahead mean inflation expectations increased by 0.87 percentage points in March 2026, and the median three-year-ahead expectation rose by 0.44 percentage points. These gains followed an already elevated baseline: background analysis in the survey shows households had been increasingly expecting higher inflation over the medium term even before the Iran conflict began.
Consumer attention to inflation also remained high. The share of consumers reporting attention to inflation stood at nearly 50% in March 2026, a level only modestly below the peaks observed in January 2023 when euro area inflation was 8.6%. This persistent vigilance indicates the recent high-inflation period continues to influence household sentiment.
The survey documents continuing concern among households about geopolitical risk. In May 2022, 35% of consumers reported high concern about geopolitical risks affecting their financial situation; by December 2024 that share was 25%, and the survey notes that this level of sustained anxiety persisted into December 2025, just prior to the Iran conflict.
Trust in the ECB emerges as an important moderating factor. Households expressing greater trust in the central bank raised their inflation expectations by substantially less than those with lower trust following both the 2022 and 2026 conflicts. The survey also reports that trust levels were higher in February 2026 than in February 2022.
The survey's findings underscore the sensitivity of household expectations to geopolitical events and to confidence in monetary institutions. The data capture both short-term spikes in inflation expectations after a new shock and a longer-run elevation in medium-term inflation outlooks that predated the most recent conflict.