FRANKFURT, Germany (AP) — The head of the European Central Bank says that businesses may be quicker to raise prices in response to the oil shock from the Iran war due to bitter memories of the inflation spike after Russia's invasion of Ukraine in 2022.
If oil and gas prices continue to rise, “the response of firms and workers may be faster than last time,” ECB President Christine Lagarde said Wednesday in the text of a speech at a conference in Frankfurt, Germany.
“We have a more recent memory of high inflation, which could affect how quickly costs are passed on and compensation is sought," Lagarde said.
Even though the ECB brought the 2022 inflation spike under control with higher interest rates, “that experience has left a mark,” she said. “An entire generation has now lived through its first episode of high inflation — and it may not be as slow to react a second time.”
Inflation in the countries that use the euro currency peaked at 10.6% in October 2022 after the invasion led to the cutoff of most Russian natural gas supplies and sent oil prices temporarily higher. Inflation in February was 1.9%, according to EU statistics agency Eurostat.
Lagarde pointed out that monetary policy cannot lower oil prices, and that central banks typically look past transitory energy spikes without raising interest rates. Raising rates only makes sense if higher energy prices start being built into prices for other goods and into workers' wages, producing a price spiral.
“If the energy shock is seen to be limited in size and short-lived, the classical prescription of looking through should apply,” she said, because by the time rate hikes take effect with a lag of months, the inflationary spike is already gone.
Central banks typically raise rates to fight inflation. That cools price increases by raising borrowing costs for things like house mortgages or building new production facilities.
She said there were reasons to think the current jump in oil prices might be less inflationary than feared, because the energy price spike is, so far, smaller than the one Europe experienced in 2021-2022.
But if inflation appears to be heading persistently above the ECB's 2% target, “the response must be appropriately forceful or persistent.”
Lagarde said it was “too early to say where in this spectrum we will need to be. ... We will monitor developments closely and set monetary policy as appropriate.”
The ECB left its key interest rate unchanged at 2% at its last policy meeting March 19.
President of European Central Bank Christine Lagarde reacts during a press conference after an ECB's governing council meeting in Frankfurt, Germany, Thursday, March 19, 2026. (AP Photo/Michael Probst)
President of European Central Bank Christine Lagarde addresses the media during a press conference after an ECB's governing council meeting in Frankfurt, Germany, Thursday, March 19, 2026. (AP Photo/Michael Probst)
The sun has set behind the buildings of the banking district in Frankfurt, Germany, late Tuesday, March 24, 2026. (AP Photo/Michael Probst)
NEW YORK (AP) — Walmart delivered another quarter of impressive sales with speedy deliveries and low prices becoming a strong magnet for people across the income spectrum that are spending more on almost everything, particularly gasoline.
Yet like other major retailers posting financial results this week, Walmart was cautious about the rest of the year given the current economic uncertainty. On Thursday, it issued a forecast for the current quarter that was weaker than what Wall Street had been expecting.
Shares slipped about 7% Thursday.
Walmart has resonated with many Americans who are increasingly careful about where they spend their money as inflation takes a bigger bite out of paychecks, notably gasoline which has soared since the start of the Iran war in late February. Walmart can serve as a barometer of consumer spending given its vast customer base. More than 150 million customers are on its website or in its stores every week, according to Walmart.
One telling shift during the quarter that captures the stress many Americans are feeling: The number of gallons that customers put in their cars during visits to U.S. Walmart and Sam’s Club gas stations fell below 10 for the first time since 2022, which was the midst of the COVID-19 pandemic.
“That’s an indication of stress,” said Chief Financial Officer John David Rainey.
Walmart touted strong sales that were fueled by online shopping on Thursday.
Comparable sales at U.S. Walmart stores rose 4.1% during the three-month period ended April 30. Walmart’s U.S online sales rose 26%, the company said.
Walmart’s promise of lower prices, faster delivery and a refresh of its merchandise has attracted wealthier shoppers. The biggest gains in market share for Walmart are coming from households with annual income over $100,000. That shift is taking place as lower-income shoppers become more entrenched in what economists collectively call a K-shaped economy.
“We see with our customers that the high-income customer is spending with confidence into many categories, while the lower income consumer is more budget conscious and perhaps navigating financial distress,” Rainey told analysts on Thursday.
Rainey told analysts that higher fuel prices took a bite out of profits as it was forced to absorb higher transportation costs. And while the company is focused on offering low prices, Walmart may raise prices later if fuel costs remain high, he said.
U.S. retailers have spent months navigating an uncertain economic environment, from President Donald Trump’s tariffs to the impact of soaring gasoline prices due to the war. The average price for a gallon of regular gasoline raced higher this week and did so again overnight. Gasoline prices are about 45% above where they were at this time last year.
Based on quarterly financial reports from Walmart, Target, Home Depot, Lowe's and TJX, shoppers are cautious but still spending, helped by more generous tax refunds. Yet there is a widespread belief among economists that once those refunds dry up, shoppers will pull back on spending. Consumer spending is the dominant economic engine for the U.S., and retreat would have broad implications for the U.S.
Target reported the largest jump in comparable sales in four years Wednesday, but a cautious outlook overshadowed rather convincing evidence that changes under the company’s new CEO are landing solidly with customers. Target raised its annual revenue outlook Wednesday, but it was still below the pace of its first quarter this year.
The nation’s two largest home improvement retailers Home Depot and Lowe’s reported strong sales, but both companies said that customers are putting off larger home projects.
“I think, overall, this has been the most difficult housing market that I’ve faced in this business since the financial crisis,” Lowe’s CEO Marvin Ellison said this week.
Walmart, based in Bentonville, Arkansas reported first-quarter earnings of $5.33 billion, or 67 cents, for the quarter ended April 30. Adjusted per-share results were 66 cents, matching the 66 cents that analysts expected, according to FactSet.
For the year-ago quarter, the company reported net income of $4.48 billion, or 56 cents per share.
Sales rose 7.3% to $177.75 billion in the fiscal first quarter, above the $174.84 billion that analysts predicted.
Walmart said higher fuel prices took a bite out of profits as it was forced to absorb higher transportation costs.
The company highlighted its speedier deliveries, which is driving more shoppers to buy more often. Rainey said that roughly 60% of U.S. online deliveries arrive at customers' homes in 30 minutes or less.
For the second quarter, Walmart expects sales to be 4% to 5% higher than the same period a year ago. It also expects per-share profit to be between 72 cents and 74 cents. Analysts had been projecting per-share earns of 75 cents on sales of $186.2 billion, according to FactSet.
Walmart stuck to the annual guidance that it issued in February.
Drones operated by Zipline leave base to make deliveries from a Walmart store in Pea Ridge, Ark., Friday, Sept. 26, 2025. (AP Photo/Charlie Riedel)
