A recent examination of European corporate earnings reports shows that major companies across the euro zone are finding it difficult to increase prices despite rising costs from the Iran conflict, signaling weakened economic conditions that are restraining their ability to charge more.
Financial analysts and European Central Bank officials have been monitoring whether the region might experience another significant wave of conflict-related inflation similar to what occurred after Russia’s Ukraine invasion.
Current evidence suggests this is unlikely to happen.
An examination of 175 euro zone earnings discussions, conducted with artificial intelligence assistance, revealed that just 56 companies had implemented or were planning price increases in the near future, indicating weak consumer demand throughout the 21-nation monetary union.
This represents a dramatic shift from the nearly two-thirds of companies that raised prices immediately following the Ukraine invasion, when energy disruptions combined with post-pandemic recovery and significant government spending drove inflation to double-digit levels.
“There is a clear difference between spring 2022 and spring 2026,” ECB policymaker Olli Rehn said while discussing the findings in an interview.
“This time around, the labour market is less tight, growth is clearly more subdued, and we don’t have such strong fiscal policy stimulus for the moment,” the Finnish central bank governor added.
Euro zone inflation stood at 5.9% when Russia began its Ukraine invasion in February 2022, compared to just 1.9% at the beginning of the Iran conflict four years later. Upcoming data is anticipated to show inflation climbing to 3.2% in May.
The more challenging economic environment should reduce pressure on the ECB to implement substantial interest rate increases beyond an anticipated initial hike next week, which economists believe is primarily designed to demonstrate commitment to preventing energy-related inflation from spreading to other sectors.
“For monetary policy, the implication is that the ECB can likely afford a bit more patience,” Allianz Global Investors’ chief economist Christian Schulz said of the results.
“The case for further tightening is less clear-cut and will require additional evidence on pass-through and underlying inflation dynamics.”
The analysis examined transcripts from 175 earnings discussions held between April 2 and May 15, using an artificial intelligence system called Claude Cowork with the Opus 4.7 model to identify whether companies mentioned increased energy expenses and plans to transfer these costs to customers.
Among the 175 companies studied, 105 addressed energy costs during their earnings presentations and 91 connected these issues to the Iran conflict.
After removing financial companies, which typically view energy disruptions as broader economic issues rather than pricing concerns, 136 companies remained for analysis. Of these, 55 indicated they had implemented or were planning price increases in coming months.
Most price adjustments were concentrated among businesses directly affected by the conflict’s impact on energy and raw materials, or in industrial sectors. These included German chemical group BASF and French cablemaker Nexans.
Companies serving consumers directly have shown greater reluctance to transfer higher costs to customers. Retailers such as Delhaize have pledged to maintain low prices, while automakers including Volkswagen are focusing on reducing expenses instead.
This differs significantly from spring 2022. Using the same AI-assisted approach for earnings calls from that time period, 108 of 132 non-financial companies passed along increased costs, including many consumer goods businesses, as accumulated demand and government support strengthened the economy.
The study indicated that businesses selling to other companies found it easier to implement price increases than those dealing directly with consumers.
Among 33 industrial companies, 11 reported passing on costs, three were planning to do so, and two were implementing partial increases.
In contrast, Italian tire manufacturer Pirelli was the only company among 26 consumer goods businesses to confirm cost pass-through, with just four others considering similar actions.
Karsten Junius, chief economist at Switzerland’s Bank J. Safra Sarasin, said this difference reflected growth patterns driven more by business investment than household spending.
“The AI development and adoption race may make some companies less price sensitive such that higher input costs can be passed on more easily,” he said.
Nevertheless, economists observed that price pressures continue building in certain economic sectors and should not be overlooked.
Price increases announced by transportation companies such as Lufthansa and Deutsche Post — often through fuel surcharges — will likely contribute to broader business costs over time.
“The jury is still out on how persistent the price effects will be, and it’s far too early to sound the all-clear,” Spyros Andreopoulos, founder of the Thin Ice Macroeconomics consultancy, said.
Research from the Bank of Finland indicates that price increases in specific sectors can take between two and 15 months to affect overall consumer inflation.
The analysis also indicates that companies have learned from the Ukraine crisis experience.
Risk management strategies — securing prices through long-term or derivative agreements — have become more common since 2022, reducing the immediate need for price increases.
Leadership at 74 companies in the study reported having hedging strategies in place, compared to 68 four years earlier.
A slightly higher percentage of companies were utilizing indexation provisions, which enable automatic price adjustments when input costs such as fuel increase.
Twenty-five percent of companies planning price increases were using such provisions, compared to 22% in 2022.
The companies examined are typically large, internationally active corporations listed on the Euro STOXX stock market index, meaning they may not represent the situation of smaller businesses.
However, the results align with a European Commission survey of companies’ selling price expectations, which declined in May after rising in April and remain well below levels reached in spring 2022.
