Oxford Economics: Gas in Europe to cost much more than expected

Gas in European countries in 2022 will cost much more than previously expected, continuing to fuel inflation, Report informs, citing RIA Novosti that Angel Talavera, head of European Economics at Oxford Economics, gave such a forecast.

“The ongoing geopolitical tensions between Russia and Ukraine have prompted our commodities team to substantially raise our energy price outlook for the current year. We now expect oil prices to remain high throughout 2022, at around $86/bbl. compared to $73 previously forecast, and similarly for natural gas prices, which now appear to be much higher throughout the year, although we previously expected them to fall rapidly from the second quarter,” the expert writes.

Forecasts for gas and oil were raised by "53% and 19%, respectively," the expert notes. These changes have led to a significant adjustment in estimates of inflation in the euro area, the expert added.

"Our new forecast assumes inflation at an average level of 3.9% in 2022, compared with the previous estimate of 2.5%," Talavera said.

Annual inflation in 19 eurozone countries in December, according to the final estimate, accelerated to 5% from 4.9% a month earlier, Eurostat reported. This was the highest figure for the currency bloc, if we count for all 19 countries, according to materials from Eurostat. The main driver of the jump in inflation was energy prices, the European Commission noted.