Surges in natural gas prices are increasingly affecting inflation in the eurozone, although so far this effect is not as significant as the impact of fluctuations in oil prices, Reuters reports, citing a study by the European Central Bank.

As the news agency reminds, natural gas prices rose sharply after the outbreak of the conflict in Ukraine in February 2022 and the introduction of Western sanctions against Russia. This led to an increase in inflation in the eurozone to double digits by the autumn of the same year and marked the beginning of the sharpest ECB rate hike cycle to date.

According to the study, gas has about a third less effect on inflation than oil, but it “plays a more important role in production than in the consumer basket, so indirect effects prevail.” Thus, a 10% increase in gas prices leads to an increase in prices by about 0.1 percentage points, and this, in turn, leads to a steady inflationary effect for more than one year. At the same time, the increase in gas prices in the period from the beginning of 2022 to the peak reached in August 2022 was close to 200%, which means that inflation increased by about 2 percentage points.

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