Western sanctions against Russia raise inflation in Europe?

As per data announced by the European Central Bank, a 10 percent gas price increase led to a price increase of about 0.1 percent, contributing to a persistent inflationary effect for more than one year, reports Politika.

The jumps in natural gas prices are increasingly affecting inflation in the eurozone. This impact is not as significant as the impact of oil price fluctuations, Reuters writes, referring to a study by the European Central Bank.

Natural gas prices have risen sharply following the outbreak of conflict in Ukraine in February 2022 and the imposition of Western sanctions on Russia. This pushed eurozone inflation into double digits by the fall of that year and led to the ECB's sharpest rate hike cycle yet.

According to the study, gas has a third less impact on inflation than oil, but "it plays a more important role in production than in the consumer basket, so indirect effects prevail".

Thus, a 10 percent increase in the price of gas leads to a price increase of approximately 0.1 percentage point, leading to a permanent inflationary effect for more than one year.

However, the rise in gas prices between the start of 2022 and the peak reached in August 2022 was close to 200 percent, which means that inflation rose by about 2 percentage points.