Overall, based on data available through August 2026, the inflationary impact and the negative effect on activity of the current energy shock remain significantly lower than the 2022 shock. Due to renewed tensions in the conflict in Iran and, consequently, on hydrocarbon prices, inflation is moving up again, but still in a limited way for now and driven solely by energy prices. Overall, confidence surveys do not show any signs of these negative trends.
In the Eurozone, the overall picture from the data available for August is positive in terms of confidence surveys and reinforces the encouraging signs seen in previous months. According to PMI surveys, inflationary pressures continue to ease, while supply-side tensions have stabilised. Business sentiment in the services sector remains stable, anchoring its previous gains, while confidence in the manufacturing sector shows a further—and marked—improvement. Another notable and encouraging development is the recovery in consumer confidence for the fourth consecutive month.
The US economy has held up well since the shock began. Consumption and business investment grew at a 4.1% annualized pace in Q2. At the same time, the scope for energy-driven disinflation has narrowed: WTI (the US reference) has averaged USD 82/bbl since 8 July, ranging between USD 72-92.
Inflation eased in June and July. The average CPI inflation rate across the fifteen leading emerging economies fell to 4.3% year-on-year in July, down from 4.8% in April. The inflationary impact remains weaker than in 2022, due in particular to reduced spillover effects on agricultural and food prices. Manufacturers’ views on the trend in input and finished product prices have returned to their pre-conflict levels.? However, against a backdrop of increasingly frequent and destructive extreme weather events, pressure on agricultural and food prices is likely to continue.
Oil and gas markets remain volatile and followed different trajectories during August. The gas market does not benefit from the buffers in place in the crude oil market. Oil prices have stabilised at a high level, widening the gap compared to the 2022 crisis. While the increase in gas prices remains lower than that seen following Russia's invasion of Ukraine, the pace of the price increase is high.
