After last month’s soaring gas and oil prices, the European Union’s statistics agency has released a report showing that annual inflation in the Euro area reached a 13-year high.
The report, which was released on Friday, shows that inflation was 3.4% in September, after being 3.0% in the previous month. This is also the highest seen since 2008.
Despite economists and central bankers claiming the hike in energy prices is temporary, it’s still a major contributor to this increase, with energy prices rising by a staggering 17.4% last month. When excluding fuel and food, core inflation in Europe was much lower at 1.9%.
Because of this, governments have been desperately looking for ways to ease the costs of energy for consumers, as it could mean higher, potentially unaffordable utility bills for millions of European households in a time when many are already suffering from energy poverty.
And, to make matters worse, there are fears of gas shortages during the winter, which could lead to another surge in prices and an extremely tight market for natural gas.
In the last week, natural gas traded at €94.46 per megawatt-hour in Europe. This is nearly five times higher than at the beginning of the year.
For low-income and vulnerable citizens, this could lead to serious issues during the colder winter months. Many consumers already struggle to heat their homes, so it could be a struggle. It could also mean higher electricity prices, as natural gas is needed to generate electricity.
European governments are already taking steps to combat higher gas electricity prices and limit the increase in energy bills for consumers by introducing tax cuts and subsidies where possible.
Despite higher overall inflation right now, the European Central Bank hasn’t announced any plans to tighten its policies. It says the change is mostly due to low energy prices at the start of the year, as demand was much lower during the pandemic.
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