Dutch Inflation Could Jump 25% Higher Due to Middle East War
The Hague, Thursday, 12 March 2026.
The Netherlands Bureau for Economic Policy Analysis warns inflation may spike by 0.6 percentage points this year, pushing rates over 25% higher than baseline projections due to escalating conflict between the US, Israel, and Iran. Oil and gas prices have surged after attacks and retaliation, with energy markets facing disruption through the crucial Strait of Hormuz shipping route.
Energy Markets React to Regional Escalation
The conflict escalated after the United States and Israel attacked Iran, prompting Iranian retaliation that has sent shockwaves through global energy markets [1]. European gas prices surged approximately 4% on Thursday, March 12, 2026, as markets prepared for potential long-term disruptions from the Middle East conflict [2]. The Amsterdam gas exchange saw prices climb to slightly above €52 per megawatt hour, reflecting growing concerns about supply chain stability [2]. Two oil tankers were attacked in Iraqi waters on Thursday, further amplifying fears about regional energy infrastructure and contributing to rising oil prices [2].
CPB Projects Significant Inflation Impact
Based on market expectations from early March 2026, the CPB calculates that inflation could end up 0.6 percentage points higher than their standard projection [1]. This would push inflation 26.087 percentage points above the baseline scenario of 2.3%, representing an increase of over 25% compared to the CPB’s standard forecast that does not factor in the Iran war [1]. The economic planning bureau emphasizes that both projections carry a high degree of uncertainty, as it remains unclear how long the Middle East conflict will disrupt oil and liquefied natural gas transport through the strategic Strait of Hormuz or restrict energy output from Gulf states [1].
Household Purchasing Power Under Pressure
In the baseline scenario, Dutch household purchasing power was set to grow by an average of 1.4% in 2026 [1]. However, even if the conflict between the United States, Israel, and Iran concludes quickly, purchasing power growth is expected to stall in 2027 due to rising tax burdens and bracket creep effects [1]. The CPB warns that many people will be pushed into higher tax brackets since the thresholds for these brackets rise only modestly with inflation, while income tax rates in the first and second brackets are also increasing [1]. Oil price increases linked to the conflict are already translating into higher petrol costs at the pump, adding additional pressure on household budgets [1].
Corporate Energy Disruptions Mount
Major energy companies are already feeling the impact of the regional conflict. TotalEnergies anticipates a 15% reduction in production due to the Iran war, having halted or planning to halt production activities in Qatar, Iraq, and off the coast of the United Arab Emirates [2]. Production at QatarEnergy was halted at the beginning of March 2026 following attacks on its facilities [2]. Morgan Stanley has increased its forecast for European gas prices for the rest of the year, anticipating a one-month shutdown of LNG production in Qatar [2]. The International Air Transport Association projects a 9% increase in airline ticket prices due to elevated oil prices [2]. Meanwhile, mortgage interest rates are also likely to rise as the conflict creates broader economic uncertainty [1].