Inflation at 3%: how much is your cash losing right now?

Last December, when eurozone inflation was still at 1.7%, the erosion of corporate liquidity was already a real problem. It was quiet, gradual, barely noticeable on a daily basis. That era is over.

Data published by Eurostat on April 30 confirms what business owners are already feeling in their cost base: annual inflation in the eurozone jumped to 3.0% in April 2026, its highest level since September 2023. In France, it stands at 2.5%. The driver is well-identified: energy prices surged 10.9% year-on-year, fuelled by the Middle East conflict and oil prices now approaching $125 per barrel.

For finance directors and business leaders, the question is no longer theoretical. It is arithmetic.

What 3% means in real euros

Inflation erosion is silent, but its effects are precise and quantifiable.

Here are some concrete examples, on an annual basis:

• 100,000 euros sitting in a non-remunerated current account lose 3,000 euros of purchasing power over twelve months.
• 500,000 euros held pending a project or reinvestment represent a silent loss of 15,000 euros.
• 1 million euros of surplus treasury, left at zero yield, absorbs an erosion of 30,000 euros per year.

These figures are not accounting losses. They do not appear on a dashboard. But they represent real value destroyed, euro by euro, every day.

And this calculation does not even account for opportunity cost: the return those same funds would have generated had they been properly allocated.

Why this shock is different from 2022

Some business leaders remember the inflationary episode of 2021-2022, when eurozone inflation peaked above 10%. The current situation is not comparable, but it contains similarities that deserve attention.

In 2022, the shock was violent and largely anticipated by markets. The ECB responded with 450 basis points of rate hikes in a single year, the fastest tightening in its history.

Today, the starting point is more fragile:

• Eurozone growth is projected at just 0.9% in 2026 according to the ECB, compared to 3.4% in 2022.
• Underlying inflation, excluding energy and food, remains far more contained at 2.3%, which limits the risk of second-round effects for now.
• The ECB kept rates unchanged on April 30 and is working meeting by meeting, with the next decision on June 30, 2026.

The result: inflation high enough to erode cash, but a growth environment too weak for the ECB to tighten sharply. An unstable balance, and potentially a durable one.

Energy at the heart of the problem

The driver of this inflation is almost exclusively energy. Energy prices jumped 10.9% in April, their strongest increase since February 2023. The Strait of Hormuz, through which 20% of global oil passes, remains under pressure. As long as the Middle East conflict persists, energy prices will remain elevated and volatile.

This energy shock propagates mechanically. Transport costs rise. Industrial production costs rise. Margins compress. And treasurers find themselves managing a double effect: rising operational costs on one side, and cash losing real value every day it sits idle on the other.

What to do, right now

With inflation at 3% and ECB rates stable at 2.00%, the calculation is straightforward: every unremunerated euro effectively returns -1% in real terms per year. This is not an abstraction. It weighs on the real value of the company's balance sheet.

The answer is not to take undue risks. It is to clearly distinguish two categories of liquidity and treat them differently.

Operational liquidity must remain available at all times. But available does not mean idle. Daily money market instruments like Smart Overnight allow these reserves to be placed in ECB-rate-anchored funds, with no lock-in and immediate availability. At a 2.00% ECB deposit rate, the annual yield does not fully offset 3% inflation, but it recovers a meaningful portion, which makes a real difference on significant amounts.

Medium-term liquidity, funds that will not be needed in the next six to twelve months, deserves a more ambitious allocation. Strategies exposed to European corporate bonds, like the Amundi EUR High Yield Corporate Bond ESG, make it possible to target a return above inflation, while staying within the euro universe and integrating ESG criteria.

A horizon to watch: June 2026

The next ECB meeting takes place on June 30. Markets are now pricing a first 25-basis-point hike at that date, with a second possible in July or September. If this scenario plays out, money market instruments like Smart Overnight will adjust mechanically upward: short-term yield will increase without any need to change strategy or reallocate.

This is one of the structural advantages of money market funds over term deposits: they automatically benefit from any rate increase, with no renegotiation required.

Conclusion

At 3% inflation, leaving cash idle is no longer a neutral choice. It is a costly one. Those who lived through 2022 know this. Those who do not remember risk learning the lesson at their own expense.

The good news: solutions exist, they are accessible, and they do not require giving up flexibility. Managing treasury intelligently in 2026 simply means deciding that every euro should work at its fair value.

Sources and references

• Eurostat, flash estimate eurozone inflation, April 2026 : ec.europa.eu/eurostat
• ECB, monetary policy decision, April 30, 2026 : ecb.europa.eu
• ECB, macroeconomic projections March 2026 : ecb.europa.eu
• Banque de France, inflation expectations Q1 2026 : banque-france.fr
• INSEE, economic outlook, March 2026 : insee.fr