German inflation rose to 7.6 per cent in March, its highest rate for 40 years, as European Central Bank president Christine Lagarde warned that Russia’s war in Ukraine was delivering a “supply shock” to the eurozone economy.

A 39.5 per cent jump in energy prices from a year earlier was the main driver behind Germany’s higher than expected increase in consumer prices, which was announced hours after the government took the first formal step towards rationing gas supplies. Berlin is preparing for a potential halt in gas deliveries from Russia because of a dispute over payments.

Presenting her gloomiest assessment yet of how the invasion would hit the bloc’s economy, Lagarde said Europe was “entering a difficult phase” as she outlined how the soaring price of energy, food and manufactured goods would squeeze consumers’ purchasing power.