The energy price shock triggered by the war in the Middle East will hit low-income households far harder than the rest of the EU population. The shock’s effects are expected to ripple well beyond household energy bills: higher oil and gas prices also feed into transport costs and, over time, into food prices, as fertiliser and other input costs rise. Lower-income households spend a larger share of their income on essentials such as food, transport, heating and electricity, which makes them particularly vulnerable to a generalised increase in living costs.
Following the US-Iran ceasefire protocol, energy prices have eased, and oil prices are returning to pre-conflict levels. However, the latest developments in the Middle East show that the situation remains extremely volatile. The Commission continues to monitor the situation, and is assessing how different possible scenarios could impact households in the EU.
How heavy will the burden be for the poorest households?
A new policy brief by the Joint Research Centre (JRC) sheds light on how severe the impact on lower-income households could be. With current price levels, the poorest households (bottom 10% of the population by income) face an average expenditure increase of about 1.9% to 2.5% of their disposable income, compared with just 0.8% to 0.9% for the richest 10% of the population. This analysis draws on the Commission’s Spring 2026 Economic Forecast, based on a scenario in which the Strait of Hormuz would stay open throughout summer 2026, with oil and gas prices peaking in the second quarter of 2026 and then gradually declining to around 20% above pre-war levels by the end of 2027.
If the conflict were to drag on, however, the gap is expected to widen further: the poorest households could face an extra spending of between 2.7% and 5.5% of their disposable income, while the richest households would face an increase of only 1.1% to 2.0%.
What is the Commission doing about this?
The Commission is helping EU Member States coordinate their response to maintain the cohesion of the energy market throughout the crisis. It also prepared a repository of the intervention measures by Member States, and published a catalogue of national practices to help reduce costs whilst strengthening energy resilience.
The JRC study highlights that targeted support measures would be a lifeline for low-income households in this period of high volatility. In the short term, EU countries can take steps to reduce the disproportionate impact that higher prices have on the poorest households.
The study also warns that the economic effects of the crisis may last longer than currently expected and persistent inflation could further erode real incomes. The Commission, in collaboration with Member States, continues to monitor the effects of the crisis on the energy market and stands ready to develop corrective actions as needed.
In the long run, however, structural measures are necessary to strengthen Europe’s resilience and better protect citizens. In the Accelerate EU Communication, the Commission urged Member States to swiftly deliver the Citizens Energy Package, which aims to ensure affordable, secure and sustainable energy for all, stronger protection against energy poverty, and an active role for citizens in the clean energy transition.
Background
The brief combines the macroeconomic models FIDELIO and JRC-GEM-E3/AGLINK-COSIMO with the EU’s tax-benefit microsimulation model, EUROMOD, to trace exactly who bears the costs of higher energy prices.
The actual impact may vary significantly from country to country, depending on their sectoral fabric, the national energy mix, climate, and other factors that determine household spending patterns.
