Think ahead this is how bad european inflation could get this winter

Key arguments

• Oil and gas prices have eclipsed the ECB's 'adverse' scenario set just six weeks earlier; gas now sets marginal European electricity prices much of the time.
• In percentage terms the gas price rise now exceeds the equivalent point of the Ukraine shock, and household energy bills likely peak only after winter.
• Food is the key uncertainty: eurozone food inflation is just 1.1%, but the ECB sees it peaking near 3.5% next summer as drought and El Nino effects arrive.
• Energy-intensive inflation categories lag energy by roughly six months; evidence of second-round effects is still absent and is not ING's base case.

Corresponding source evidence

1. James Smith looks at how it could top 5% this winter This is how bad European inflation could get this winter It’s a sign of the times that energy prices are not the top talking point at next week’s European Central Bank meeting. · next week
2. France, surging bond yields, and what the ECB might do about all that will take centre stage.
3. Here in the UK, the latest predictions for the household energy price cap, which is intrinsically linked to wholesale gas prices, suggest electricity and gas bills will rise a whopping 25% in January.