Household consumption in the euro area fell sharply in the first weeks of the war with the Islamic Republic.

In an economic bulletin released on Monday, the European Central Bank attributed the decline to a drop in consumer confidence and warned that the resumption of fighting could disrupt household spending again.

Based on this report, the decline in consumption in Farvardin was double what historical trends would have indicated, and in magnitude it was comparable to households’ reaction to Russia’s attack on Ukraine in the early months of 2022.

The European Central Bank wrote: “This shows that the confidence channel is particularly strong in large shocks that consumers clearly understand.”