BAKU, Azerbaijan, Sept.22
By Leman Zeynalova – Trend:
The further rise in wholesale gas prices could boost annual euro-zone electricity and gas inflation from 11 percent now to as much as 60 percent, Trend reports with reference to the UK-based Capital Economics research and consulting company.
“It is difficult to say how strong the passthrough to consumer prices will be since the rise in gas prices is unprecedented in recent times. Given the factors described above, it is likely that Europe will continue to feel the largest effects among the major advanced economies. On the face of it, the further rise in wholesale gas prices could boost annual euro-zone electricity and gas inflation from 11 percent now to as much as 60 percent, which would add 2.5ppts to headline inflation. In fact, the passthrough is likely to be far smaller since governments are already acting to limit the effect on consumers. We suspect that rising gas prices will add a further 0.5 to 1.0ppts to euro-zone inflation in the rest of this year and 0.5pp to UK inflation in April 2022, with smaller impacts in Japan and the US,” said the company.
In all, Capital Economics expects a rise in gas and electricity inflation to around 16 percent to add an average of 0.3ppts to headline inflation in major advanced economies in the rest of this year, on top of the 0.3ppt boost which they have experienced already. “This should reverse next year, particularly given our expectation that gas prices will recede. But there are risks in both directions, and gas prices are notably volatile.”
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