"We are facing a stagflation shock," Economic Affairs Commissioner Valdis Dombrovskis told CNBC on Monday.
Stagflation means that high inflation prevails while the economy stagnates.
Dombrovskis said that the EU, in its spring forecast to be released later this week, will lower economic growth forecasts and raise inflation forecasts.
He added that the EU's room for manoeuvre is "more limited now," leaving less scope for the kind of broad fiscal measures seen during the pandemic.
We think it is important that the support measures we take are temporary and targeted, not ones that actually maintain high demand for fossil fuels.
