The European Commission reduced its eurozone growth forecast for 2022 to 2.7 percent on Monday, blaming rising energy prices on Russia’s invasion of Ukraine.

The war also prompted the EU’s executive to revise its eurozone inflation forecast for 2022, with consumer prices expected to rise by 6.1 percent year on year, significantly higher than the previous forecast of 3.5 percent.

“There is no doubt that the EU economy is going through a challenging period due to Russia’s war against Ukraine, and we have downgraded our forecast accordingly,” EU executive vice president Valdis Dombrovskis said.

“The overwhelming negative factor is the surge in energy prices, driving inflation to record highs and putting a strain on European businesses and households,” he added.

The EU warned that the course of the war was highly uncertain and that the risk of stagflation — punishing inflation with little or no growth — remained a real risk going forward.

If Russia, the EU’s main energy supplier, should cut off its oil and gas supply to Europe completely, the commission warned that the forecast would worsen considerably.

“Our forecast is subjected to very high uncertainty and risks,” EU commissioner Paolo Gentiloni told reporters.

“Other scenarios are possible under which growth may be lower and inflation higher than we are projecting today. In any case, our economy is still far from a normal situation,” he said.

For the EU as a whole, including the eight countries that do not use the euro as their currency, the commission had also forecast growth of four percent in February, but has now cut this to 2.7 percent, the same level as for the eurozone.

The sharp reduction in expectations is in line with the forecast made in mid-April by the International Monetary Fund, which predicted 2.8 percent growth for the eurozone this year.

The EU’s warning for the coming months comes as the European Central Bank is widely expected to raise interest rates in July to combat soaring inflation.

Critics warn that this could stifle economic activity at a time when the economy is already facing headwinds from the Ukraine conflict.