BAKU, Azerbaijan, Aug.1. Looking ahead, retail prices for energy may continue to increase in many countries, Trend reports with reference to the International Monetary Fund (IMF).
“Importantly, in countries where retail price increases have been small so far, adjustments may continue, either as international prices filter into import contracts gradually or as domestic retail prices of energy continue to be adjusted to reflect higher costs. Some of the burden may fall on energy firms and/or the government, but the historically large increase in natural gas prices may make it exceedingly costly for domestic energy providers and/or the government to maintain retail prices below cost-recovery for an extended period. For illustrative purposes,” reads the latest IMF report.
The report reveals that the additional impact is particularly high in countries with a relatively large share of household spending on natural gas and which have experienced a relatively small pass-through to retail natural gas prices to-date (e.g., Croatia, the Czech Republic, Hungary, Romania, and Slovakia).
“In all European countries, poorer households tend to spend more on electricity as a share of total consumption than richer households. Thus, the direct impact of higher electricity prices is regressive. Poorer households also spend, on average, more on natural gas (relative to their total consumption) than richer households in most countries - with a few exceptions such as Bulgaria, Hungary, Lithuania, and Romania.”
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