Oil and gas prices are rising: fears of inflation are back

According to the one published on Tuesday Quick estimate According to Statistics Austria, inflation in Austria climbed back to 2.2 percent in February.

Energy and fuel prices rose slightly from January to February, even if they still remained below the previous year’s values. This means that their “inflation-dampening contribution” has become smaller and the inflation rate is therefore rising slightly again, explains IHS expert Sebastian Koch. “Rising energy prices could already be observed in the run-up to the attack on Iran. And now, of course, all scenarios are conceivable.”

Coffee brew reading

Wifo economist Josef Baumgartner also sees it that way. He said last week, shortly before the start of the war in the Gulf, that he would revise the inflation forecast for 2026 downwards from 2.6 to 2.0 percent. Then the USA and Israel attacked Iran and all predictions were lost again.

On Tuesday, Baumgartner told KURIER: “We are not yet ready to commit to a more precise scenario for the next forecast at the beginning of April. But depending on the duration of the conflict and depending on how long Iran can block the Strait of Hormuz, annual inflation could rise again towards three percent in 2026.”

Bad combination

Experts are concerned about the sharp rise in crude oil prices, which will soon have an even greater impact on prices at gas stations. And in addition there is the even sharper jump in gas prices, to which electricity prices are also linked. That would affect households, but of course also industry. In addition to personnel costs, energy prices are one of the largest cost factors in companies.

This unpleasant combination is still familiar from the price explosion for gas and then electricity in the wake of the Ukraine war. The difference, of course, is that gas purchases are no longer dependent on Russia and therefore the impact on prices in Austria is likely to remain limited. After the Russian attack on Ukraine in February 2022, inflation in Austria rose to 11.2 percent in January 2023.