Key finding - Only a minority of large euro zone companies have signalled they are raising or plan to raise prices as a result of the Iran war, a review of recent earnings calls shows, highlighting weakened pricing power across the currency union.
An analysis of 175 earnings calls held by euro zone-listed firms between April 2 and May 15 found that just 56 companies indicated they had increased or intended to increase selling prices in response to the disruption stemming from the Iran conflict. That means roughly one-third of the sample flagged price pass-through, a far narrower response than after Russia’s invasion of Ukraine in 2022.
When the same AI-assisted methodology was applied to commentary from spring 2022, nearly two-thirds of comparable companies reported passing higher costs on to customers. Back then, an energy shock combined with robust post-pandemic demand and sizeable fiscal support, pushing inflation into double-digit territory. By contrast, the current mix of lower inflation, less tight labour markets and muted growth appears to be constraining firms’ ability to raise prices.
European Central Bank policymaker Olli Rehn reflected on the difference between the two periods, saying: "There is a clear difference between spring 2022 and spring 2026. 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." Rehn made the comments while discussing these findings in an interview.
Inflation metrics underscore the distinct starting points: inflation in the euro zone was 5.9% when Russia invaded Ukraine in February 2022, while it stood at 1.9% at the outset of the Iran war. Official data due on Tuesday was expected to show euro zone inflation rising to 3.2% in May.
Method and scope
The review examined 175 earnings call transcripts using an AI-assisted tool, Claude Cowork, which employed the Opus 4.7 model to identify mentions of higher energy costs and whether managements were planning to pass those costs on to customers. Of the 175 companies, 105 discussed energy costs during their calls and 91 explicitly linked the issue to the Iran war.
Because financial firms typically treat energy shocks as a macroeconomic factor rather than a direct pricing issue, Reuters excluded them from a subset analysis. That left 136 non-financial companies. Within this group, 55 said they had raised prices or were planning to do so in the months ahead.
Sectors and firm types differ
The pattern of pass-through is not uniform across sectors. Industrial firms and companies with direct exposure to energy and raw material inputs were more likely to increase prices. Examples include German chemical group BASF and French cablemaker Nexans, which reported or signalled moves to transfer higher costs to buyers.
By contrast, consumer-facing businesses have generally been more reluctant to pass on higher input costs. Retailers such as Delhaize said they were committed to keeping consumer prices low, and major automakers including Volkswagen reported a focus on cost reduction rather than immediate price hikes. Among 26 consumer goods companies in the sample, only Italian tyre-maker Pirelli confirmed passing on higher costs, with just four other consumer firms considering similar action.
The analysis indicates companies selling to other businesses are finding it relatively easier to raise prices than those selling directly to households. Of 33 industrial firms examined, 11 said they were passing on costs, three were planning to do so and two were implementing partial increases.
Why firms are holding back
Several factors identified in the company commentary and by economists help explain why fewer firms are implementing price increases now than in 2022.
- Weaker demand. The broader economic backdrop is softer, which limits firms' ability to transfer higher input costs to customers without losing market share.
- Less tight labour markets. Lower wage pressure reduces the urgency for aggressive price adjustments.
- More hedging. Managements reported hedging strategies that lock in input prices and reduce immediate cost volatility. In the sample, 74 companies said they had hedging in place, up from 68 four years earlier.
- Use of indexation clauses. A modestly higher share of firms are relying on contractual indexation clauses that automatically adjust prices when inputs such as fuel rise. About a quarter of firms planning price increases in the current sample said they were using such clauses, compared with 22% in 2022.
Implications for central bank policy
Economists said the more muted pass-through should reduce pressure on the ECB to follow up a widely anticipated first rate hike with additional tightening. Allianz Global Investors’ chief economist Christian Schulz summed up the view on policy, saying: "For monetary policy, the implication is that the ECB can likely afford a bit more patience. The case for further tightening is less clear-cut and will require additional evidence on pass-through and underlying inflation dynamics."
That assessment suggests policymakers will be watching whether price increases already announced - notably by some transport firms - propagate through business costs and later into consumer prices.
Transport-related surcharges, such as those put in place by airlines and parcel carriers to reflect higher fuel expenses, were highlighted as examples of cost increases that may gradually feed into wider business costs. Lufthansa and Deutsche Post were cited in company comments as having introduced measures often implemented via fuel surcharges.
Areas of emerging pressure and remaining uncertainty
Economists cautioned that although pass-through is currently limited, price pressures are forming in pockets of the economy and could still affect broader inflation measures over time. Spyros Andreopoulos, founder of the Thin Ice Macroeconomics consultancy, warned: "The jury is still out on how persistent the price effects will be, and it’s far too early to sound the all-clear."
A Bank of Finland study referenced in the commentary suggests that the pass-through of sector-specific price rises into aggregate consumer inflation can take anywhere from two to 15 months, underlining the lagged nature of such effects.
Lessons learned since 2022
Companies appear to have adjusted their approach following the 2022 episode. Hedging and contractual mechanisms that moderate input cost swings are more commonly used, reducing the immediacy of the need to raise prices. The increased reliance on such tools, plus greater emphasis on cost control by firms in consumer-facing sectors, seems to have lowered the overall propensity to shift higher input costs onto customers.
However, the sample studied consists mainly of large, globally active corporations listed on the Euro STOXX index, and may not reflect the experience of smaller firms, which could face different pressures and fewer options to absorb rising input costs.
Survey evidence aligns with findings
Complementing the earnings-call analysis, a European Commission survey of firms’ selling price expectations showed an easing in May after a spike in April. The survey's measures remain well below the peaks recorded in the spring of 2022, which is consistent with the more restrained price pass-through identified in company commentary this spring.
Conclusion
The earnings-call review points to a notable retreat from the sweeping cost pass-through observed after the Ukraine shock. Softer growth, less labour market tightness, more hedging and limited fiscal support are among the factors that appear to be restraining firms’ willingness or ability to raise prices following the Iran war. While some sectors, particularly parts of industry and transport, have enacted price measures that may ripple through the economy, overall corporate commentary suggests inflationary pressure from the conflict has so far been contained compared with the extreme outcome seen in 2022.