A continuation of the war in the Middle East will have a negative impact on the eurozone economy, and its performance may be worse than the European Central Bank's (ECB) baseline scenario presented last month, said Gabriel Makhlouf, a member of the ECB's Governing Council and Governor of the Central Bank of Ireland.

"As the conflict persists without clear resolution, a more prolonged period of higher prices becomes likely," says Makhlouf's report, published on the Irish Central Bank's website. "This approaches the adverse scenario in the staff projections."

According to him, energy prices are currently between the baseline and negative forecasts. The baseline forecast assumes inflation in the eurozone this year will be 2.6%, while the negative forecast assumes 4.2%.

Data released yesterday indicated that the annual rate of growth of consumer prices in the eurozone accelerated in March to the highest since January last year, reaching 2.5% from 1.9% in February.

Data released yesterday indicated that the annual rate of growth of consumer prices in the eurozone accelerated in March to the highest since January last year, reaching 2.5% from 1.9% in February.