Olivier Coibion and his fellow researchers analyzed data from the Consumer Expectations survey, finding that households began tracking price fluctuations with intense scrutiny the moment the Iran conflict erupted. This reaction occurred even though inflation remained tethered to the 2% target. By March 2026, nearly half of all respondents reported vigilant monitoring of prices—a level of concern previously seen only when inflation soared to 8.6% in early 2023.

Financial stress memories from the Ukraine crisis have left a lingering imprint, making current consumers hyper-reactive to new geopolitical shocks. The researchers suggest that when these memories collide with fresh supply disruptions, they reinforce a cycle of uncertainty. With oil prices surging past $120 a barrel in April, this psychological shift risks anchoring expectations of rising costs and slowing growth. As the ECB prepares for its next policy meeting, the certainty of a rate hike reflects the urgency of managing these persistent, inflation-sensitive sentiments.