The ECB said in its Economic Bulletin on Monday that recent gas-price spikes are
likely to transmit to euro-area inflation faster than in the past, though growth
in renewable generation lessens the pass-through to electricity costs. Supply
constraints from a war in Iran and low European inventories raise further upside
price risk; wholesale gas prices are more than 140% higher YoY. Market
liberalization since the 2022 Russia-Ukraine shock — including more flexible
pricing and shorter contract tenors — means retail gas prices will also respond
faster. An ECB survey of euro-area national central banks found that in over
half of countries wholesale gas moves now feed into gas inflation within 1–3
months, about 10% report 4–6 months, one-third report 7–12 months, and the share
of countries reporting 13–24 month lags has fallen from roughly 40% to about 5%
since 2022.
