The European Central Bank found that wholesale gas-price changes were expected to reach consumer gas inflation within one to three months across more than half of the euro area by inflation weight. A 2026 survey of Eurosystem national central banks showed the pass-through had accelerated since the previous energy shock. The finding means energy moves may affect the near-term inflation picture faster than policymakers previously observed.
The ECB said the share of euro-area countries reporting a slow pass-through of 13 to 24 months had fallen to about 5%, from roughly 40% in 2022. Around one-tenth of the bloc now reported transmission within four to six months, while about one-third reported seven to 12 months. Reuters reported that wholesale natural gas prices were more than 140% higher than a year earlier as supply constraints and low European storage increased price pressure.
FASTER GAS TRANSMISSION
The central bank linked the faster transmission partly to increasingly liberalised retail markets, shorter fixed-term contracts and more flexible tariffs. These arrangements connect household bills more closely to wholesale prices and allow suppliers to adjust charges more frequently. Taxes and charges still moderate the pass-through, accounting for 31% of average euro-area gas prices in 2025.
The ECB also stressed that the duration of a wholesale spike matters. Providers that purchase energy years in advance or offer longer contracts can shield customers from short-lived increases, while market-based and flexibly adjusted prices transmit changes more quickly. The result therefore varies across countries rather than producing a uniform inflation timetable.
RENEWABLES WEAKEN ELECTRICITY LINK
Electricity prices were less responsive to gas than during the 2021–22 crisis because renewable generation had weakened the mechanical link between gas and wholesale power costs. The ECB found that wholesale electricity-price increases in 2026 were more modest than in the earlier shock, although outcomes differed across national markets. Spain showed fewer hours in which gas set electricity prices, while Italy remained more exposed to gas-based price-setting.
The analysis does not prescribe an interest-rate decision, but it identifies gas prices as a faster source of near-term inflation volatility while electricity pass-through has become less intense. Policymakers will next watch whether current wholesale pressure persists long enough to reach household contracts and broader prices. Future rate implications will depend on the shock’s duration, inflation expectations and incoming euro-area data.