Eurozone businesses do not expect to see a pickup in wage increases this year and next, despite the acceleration in inflation that has accompanied the conflict between the U.S. and Iran, the European Central Bank said Friday.

With the Strait of Hormuz largely closed to shipping, prices of oil and natural gas have risen since the conflict began in late February. In June, the eurozone's annual rate of inflation stood at 2.8%, up from 1.9% in February.

However, the ECB said 79 leading eurozone businesses contacted between June 22 and July 1 expect the pace of wage increases will slow to 2.5% this year and 2.4% next from 3.1% in 2025.

The central bank said only 20% of the businesses expected workers to press for bigger pay rises in response to the pickup in inflation, while only 10% intended to offer larger increases to compensate their employees for the jump in prices.

"Most contacts did not anticipate any notable impact on wage growth, citing the subdued economic conditions and employment outlook," the ECB said.

Central bankers worry that the pickup in energy prices will have what they call second-round effects on other goods and services, broadening and extending the inflation shock from the conflict.

That could happen if workers secured bigger pay rises to preserve their purchasing power, with businesses in turn raising their prices to maintain their profit margins.

However, ECB President Christine Lagarde Thursday said there were as yet no signs of that broadening of inflationary pressures after policymakers left their key interest rate unchanged at 2.25%.

"Believe me, we are really scrutinizing the emergence of second-round effects, but we are not seeing it," she told a news conference.

The ECB also found that businesses were finding it difficult to pass higher costs onto consumers through higher prices.

"In businesses closer to the consumer, the pricing environment was more challenging, and there had been little adjustment of prices so far," it said. "Consumers remained very price sensitive."

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

July 24, 2026 04:00 ET (08:00 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.