FRANKFURT – The war in Iran has weighed on household consumption across the eurozone in the early weeks of the conflict, with the European Central Bank (ECB) saying a sharp decline in consumer confidence was the main driver behind weaker spending.

According to Reuters, an article published in the ECB's Economic Bulletin said the decline in consumer spending in April 2026 was significantly larger than historical patterns would suggest. The drop was comparable to the impact seen after the outbreak of the Russia–Ukraine war in early 2022.

The ECB said the findings underscored how vulnerable consumer confidence is to major shocks that directly affect households. Should the conflict escalate again, household spending could weaken further, posing an additional drag on the eurozone's already sluggish economic growth.

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Annual nominal household consumption growth, which had hovered around 3% to 4% since mid-2024, slowed to about 2.5% in April.

The decline was driven primarily by higher-income households, which began cutting discretionary spending.

The ECB said the slowdown in consumption was not due to income constraints but rather because many households chose to postpone purchases when they still had flexibility over the timing of their spending.

Households were also concerned that the conflict could fuel inflation, eroding their real incomes. An ECB survey showed that around 40% of respondents were not confident that any loss in purchasing power would be recovered in the future. (ARF/ZH)

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