German, Spanish Inflation Reach Multiyear Highs

German and Spanish inflation climbed again in April to multiyear highs as tensions in the Middle East continued to drive up energy prices.

Consumer prices were 2.9% higher than a year earlier in Germany, an increase in the annual rate of inflation from 2.8% in March, according to EU-harmonized figures published by Destatis on Wednesday, its highest since January 2024.

Most Read from The Wall Street Journal

Spain’s statistics agency INE said inflation rose to 3.5% in April from 3.4% in March, reaching its strongest level since June 2024.

The inflation rate in both countries jumped last month following the outbreak of war in Iran, which sent energy prices skyrocketing across Europe. Prices look set to remain elevated, with uncertainty continuing over the reopening of the Strait of Hormuz, through which roughly a fifth of the world’s oil flows. Brent crude oil prices are currently back up above $110 a barrel as talks between the U.S. and Iran remain stalled.

Energy prices were up 10.1% on the same month of the previous year in Germany, Destatis said, the largest increase since February 2023 when Europe’s largest economy was still weaning itself off Russian gas after Russia’s invasion of Ukraine.

The European Union’s statistics agency Eurostat is scheduled to publish inflation figures for the overall eurozone on Thursday, shortly before the European Central Bank meets to decide on interest rates.

The central bank has said it remains willing to act if necessary to keep inflation in check. But the ECB is widely expected to keep rates on hold as it continues to assess the extent to which higher energy prices are feeding through to core inflation.

“There is no easy path back to where we were before this conflict erupted,” ECB President Christine Lagarde said in a speech last week.

“Households and firms have just lived through a large inflation shock and may be more sensitive to rising costs. The muscle memory is fresh,” she said.

In separate data published Wednesday, the European Commission’s economic sentiment indicator this month sank to its lowest point since November 2020, a time when strict pandemic restrictions were hitting consumers and firms.

Lagarde added, however, that higher energy prices and weaker consumer sentiment would weigh on demand, which could limit the extent of price and wage increases.