Wholesale Gas Prices Fuel Inflation Fears in Eurozone
The European Central Bank (ECB) has warned that wholesale gas prices are passing through to consumers faster than in the past, with inflation numbers likely to reflect this within one to three months for most Eurozone members.
This increased pressure on electricity prices is partly offset by a shift towards renewable energy sources, which have dampened the impact of rising gas prices. However, natural gas prices have doubled since the conflict in the Middle East began, while oil prices have only risen modestly, by around 40%.
The ECB has raised interest rates twice this year to combat inflation above its target of 2%, with the latest increase coming in September. The bank's economists note that the outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth.