Eurozone inflation is re-energized

Eurozone inflation is set to rise again as higher oil and gas prices reverse the recent energy-driven disinflation. The deterioration in the Middle East has led our energy analysts to raise their forecasts for key energy products. We now forecast headline inflation at 3.1% in 2026 and 3.5% in 2027. The immediate rebound is energy-driven, but the key risk is that higher energy and distribution costs feed into core inflation through supply chains, wages and margins. We expect core inflation to average 2.4% in 2026 and 2.6% in 2027. Inflation will diverge across member states. Among the four largest member states, Spain is expected to record the highest inflation in 2026–27 and France the lowest.