The European Central Bank's economic bulletin revealed that consumer sentiment deteriorated and consumption plunged at the start of the Iran war. The drop in consumption in April was twice the past trend, comparable to the shock seen at the time of Russia's invasion of Ukraine in early 2022. Nominal consumption growth had been averaging around 3 to 4 percent since mid-2024, but slowed to around 2.5 percent in April, mainly because high-income households cut discretionary spending. The ECB indicated that this slowdown was not due to strict income constraints, but rather the result of households adjusting the timing of their spending and postponing purchases. It also noted that 40 percent of households were concerned that their real incomes could be eroded by a sharp inflation spike caused by the conflict, and did not expect to recover the lost income.