War in the Middle East: How high will inflation explode?

Dince the start of the conflict in the Middle East in February 2026, economic tensions have increased. The production and transport of oil and gas are compromised and prices are soaring on world markets. These increases impact all consumer goods and services: food, manufactured products, logistics, etc.

On the show I think therefore I act presented by Melchior Gormand on RCF Notre Dame, economist Laurent Ferrara, professor of international economics at Skema Business School and Julien Pillot, teacher-researcher in economics at INSEEC grande École, paint a worrying picture of the European economy.

Inflation on households, a long-standing story

Europe is witnessing a succession of crises. The problems allegedly started in “2008 with the financial crisisthen the Euro crisis with the debt of peripheral countries, Covid and the War in Ukraine†, explains economics teacher-researcher Julien Pillot. In addition to these discomforts, a new event has been added since February 2026: the war in the Persian Gulf which prevents navigation with complete peace of mind. One of the most notable examples is a CMA-CGM ship which was attacked on Wednesday May 6. This worrying news reveals that carriers no longer have any other choice but to ensure their protection. This defense naturally has a cost which will be reflected in the goods sold to the consumer. The economist Laurent Ferrara calls this situation “oil shock…car “changes in the price of oil have increased by 50% on the price of a barrel†, in just one month.Â

 

Global shocks account for 25% of domestic inflation.

 

Economists point to a “inflation importée†. In fact, domestic inflation in France amounts to only 0.3% in January 2026. The problem would come from globalization since the 1990s, notably with the creation of organizations such as the World Trade Organization, of which China has been a member since 2001. This common policy…in commercial and financial matters, the fact that now, when we have a shock outside, it has repercussions domestically”worries Laurent Ferrara. In addition, in January 2026, the European Central Bank warns in a report “that for an average country, global shocks account for 25% of domestic inflation”, says the economist. For France, this is not an isolated case, because it is quite exposed, being a country that imports raw materials.

 

If everyone thinks prices are going to go down, prices go down.Â

 

The effects of expectations, one of the factors of inflation. “If everyone thinks prices are going to go up, prices go up. If everyone thinks prices are going to go down, prices go down… confirms Laurent Ferrara. It is the financial and raw materials markets that anticipate most frequently by adjusting their prices most quickly. Car“when the price of oil increases, it is not because there is a disruption in supply or an increase in demand, it is also the effect of announcements from the Organization of the Petroleum Exporting Countries”, says economist Laurent Ferrara. Some opportunistic companies are taking advantage of this situation to increase their turnover.

 

Between 20 and 25% of world oil production passes through this strait.

 

A European market with little exposure to energy problems. The hostilities in the Persian Gulf do not greatly influence the European economy because Europe depends very little on oil imports from this region of the world. But as Laurent Ferrara reminds us, “Between 20 and 25% of world oil production passes through the Strait of Hormuz. This creates a shock to the price of oil which ultimately affects all consumers.”. In finethe problem concerns both “the French individual who needs gasoline to go to work in the morning, and the French entrepreneur or industrialist who needs energy to simply be able to produce and run his factories”précise l’économiste.

The European Union expected on measures

“When l’inflation of a country is above 2%, which is the objective of the European Central Bank, then the ECB must reactâ€says economist Laurent Ferrara. In April 2026, inflation is at 3%. The President of the ECB, Christine Lagarde, in principle, should react. Except that it faces a dilemma linked to the shock of imported inflation. If it decides to raise its interest rates in order to counter inflation, it risks slowing down economic growth. An increase in rates would lead to a reduction in economic activity, because credit would become less accessible. “European economic activity is already very weak, with growth in France estimated at around 0.9%, which could surely fall to 0.6%”predicts the economist. Since January 2026, the current policy has been to not intervene and wait, as the risks and uncertainties are considered too high. In France, growth forecasts were initially set at 0.9% before the start of this turbulent period.

 

European economic activity is already very weak.

 

Despite the war, new ideas emerge.  Know “Three optimists†suggests the economist Laurent Ferrara, because this conflict allows us to understand the need for an ecological transition. “The crisis in which the world is living allows us to think about how we plan to decarbonize globally†, informs Laurent Ferrara. This shift towards a greener path is already being felt, with a clear acceleration in sales of electric cars. Between January and April 2026, this sector saw an overall increase of 48% in sales.