Commerzbank’s Senior Economist Dr. Ralph Solveen reports that Germany’s inflation rate increased significantly from 1.9% to 2.7% in March 2026, driven by a sharp rise in energy prices resulting from the ongoing war in Iran [1]. Core inflation remained steady at 2.5%, but business surveys indicate rising price expectations, suggesting that underlying inflation pressures may intensify if the conflict persists [1]. Dr. Solveen emphasizes that while second-round effects are not yet apparent, they could emerge in the coming months should energy prices continue to climb or remain elevated due to the war [1].
Commerzbank expects the European Central Bank (ECB) to respond to these inflationary pressures with a 25 basis point rate hike in late April [1]. The bank notes that 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, potentially forcing the ECB to take further action [1].
The report highlights that energy prices, which have surged due to the war in Iran, are the primary driver behind the jump in Germany’s inflation rate according to the national definition [1]. If the conflict persists, core inflation rates in Germany and across the euro area are likely to rise, increasing the probability of additional ECB rate hikes [1].
CONCLUSION
Germany’s inflation has spiked due to war-driven energy price increases, prompting Commerzbank to forecast an imminent ECB rate hike. If the conflict in Iran continues, further inflationary pressures and additional monetary tightening may follow. The market is likely to react strongly to these developments, given their significant impact on price stability and interest rates.