Businesses in the euro zone face challenges raising prices due to Iran conflict.

Analyses of 175 euro zone earnings calls by reveal a trend. In contrast to the aftermath of the Ukraine invasion, fewer companies are increasing their prices.

A significant number of Europe's top businesses are hesitant to increase prices due to the ongoing conflict with Iran, according to data which analyzed comments made by these companies on their quarterly earnings reports.

European Central Bank policymakers and investors are grappling with a pressing question: will the euro zone be hit by a new wave of war-related price hikes, similar to those triggered by Russia's incursion into Ukraine.

Currently, there's no indication of a positive outcome.

An examination of 175 euro zone earnings calls reveals that just 56 businesses have increased or intend to increase prices over the next few months, indicating a lackluster market within the 21-nation euro zone region.

The current situation starkly diverges from the preceding period, where a staggering 67% of businesses raised prices after the Ukraine invasion, fueled by a perfect storm of high energy costs and pent-up demand following the pandemic.

ECB policymaker Olli Rehn highlighted a notable distinction between spring 2022 and spring 2026, referencing relevant data uncovered by.

The current economic landscape shows a more relaxed labor market, with growth noticeably slower than before, and no significant fiscal support measures currently in place.

The euro zone's inflation rate had reached 5.9% by the time Russia invaded Ukraine in February 2022, a stark contrast to the 1.9% level seen four years later when the Iran war began. New data scheduled for release on Tuesday is anticipated to reveal an uptick to 3.2% in May.

A softer economic environment may temper the European Central Bank's need to significantly increase interest rates beyond its already anticipated initial rate hike scheduled for next week.

The European Central Bank's ability to delay further action seems reasonable given these findings, according to Christian Schulz, chief economist at Allianz Global Investors.

Further monetary policy adjustments are now uncertain due to unclear pass-through effects and underlying inflation trends.

A proprietary AI tool, Claude Cowork, was utilized by to analyze 175 transcripts from earnings calls held between April 2 and May 15.

The agent tasked with analyzing data from the Opus 4.7 model was instructed to examine how businesses addressed rising energy expenses and their potential impact on consumer prices.

Among the 175 firms surveyed, a significant number of 105 mentioned rising energy expenses in their quarterly reports, while 91 tied these concerns to the ongoing conflict with Iran.

A total of 136 non-financial firms were scrutinized, revealing that only 55 of them are anticipating price hikes or have already implemented them in the near future.

The majority of price hikes were seen among companies directly impacted by the war's influence on energy and raw materials, or in industrial products, such as German chemical conglomerate BASF and French cable manufacturer Nexans.

In stark contrast to the Ukraine invasion era, consumer-facing businesses have shown a marked hesitation in raising prices. Retail giants like Delhaize have made a commitment to keep prices stable, whereas automotive companies such as Volkswagen are prioritizing cost-cutting measures.

In stark contrast to the spring of 2022, our analysis reveals a notable difference in price increases. Out of 132 non-financial companies studied, 108 successfully absorbed higher costs into their earnings calls from that time.

Business-to-business transactions are proving more lucrative for price increases, whereas direct consumer sales present significant challenges.

Thirty-three industrial companies surveyed revealed that eleven are directly absorbing cost hikes, while three plan to follow suit in the near future.

In stark contrast, Pirelli, an Italian tire manufacturer listed as PIRC.MI, stands out from its peers in the consumer goods sector by confirming cost pass- a strategy adopted by only four other companies among 26.

According to Karsten Junius, chief economist at Bank J. Safra Sarasin in Switzerland, economic expansion is largely fueled by investments rather than domestic spending habits.

Companies competing in the AI development and adoption space may become less concerned with prices, allowing them to absorb increased input costs more efficiently.

Economists warn that rising costs are far from being contained within certain sectors of the overall economy.

Transport companies like Lufthansa (LHAG.DE) and Deutsche Post frequently implement price hikes, typically through fuel surcharges, which can ultimately lead to increased expenses for businesses in the long run.

It's premature to declare victory over price persistence, according to Spyros Andreopoulos, a seasoned expert at Thin Ice Macroeconomics consultancy.

Research from the Bank of Finland indicates that implementing price hikes within specific industries can take anywhere from two to fifteen months to impact overall consumer prices.

Businesses in the Eurozone have internalized the impact of the Ukrainian crisis.

Price protection strategies, such as hedging through derivatives or long-term agreements, have gained traction since last year, easing pressure on businesses to increase costs.

Company executives reported having hedging strategies in place for their operations, a significant increase from 68 firms previously.

More firms are now leveraging indexation provisions in their contracts, enabling them to revise prices accordingly when raw material expenses surge.

Among those intending to hike prices, nearly a quarter are leveraging such provisions, down from 22% last year's figure.

Large corporations featured in a study are often listed on the Euro STOXX stock market index, which might not accurately represent smaller businesses' experiences with price increases.

Recent data echoes a European Commission study showing companies' anticipated selling prices have decreased since May, following an uptick in April, and remain significantly lower than their peak in the spring of 2022.