Peter Kazimir, a European Central Bank Governing Council member, warned that natural gas prices at a four-year high and depleted storage are becoming the key threat to euro-area inflation. The warning comes days after the ECB's second rate hike of 2026, with markets now pricing a strong chance of a third by year-end.
Peter Kazimir, Governor of the National Bank of Slovakia and a voting member of the ECB Governing Council, shifted his inflation warning away from oil and toward natural gas and electricity in a blog post published September 14.
Gas prices hit a four-year high
Natural gas is trading at four-year highs, and EU storage levels sit well below historical norms. Kazimir pointed to tensions tied to the Iran conflict as a driver of volatile market conditions that delayed summer storage-filling campaigns across Europe. As a result, nations are now rushing to refill storage heading into the colder months, and prices are surging.
According to Reuters: "My attention is now focused less on oil and fuel prices", Kazimir said, adding that gas and electricity prices now draw more of his attention.
Rate hikes and the inflation tilt
The ECB raised its key policy rate to 2.5% at its September 10-11 meeting, up from 2.25% — the second increase of 2026. Kazimir described the risks to inflation as leaning firmly toward higher outcomes, signaling the Governing Council sees a greater chance of inflation surprising higher rather than lower in coming quarters.
Markets appear to agree: interest rate futures point to roughly a 60% probability of another hike when the ECB meets on October 29, which would bring the policy rate to 2.75%.
Food inflation adds to the pressure
Food price growth has so far stayed unexpectedly low, but Kazimir flagged a mix of factors — a European drought, the El Nino weather pattern, and soaring diesel and fertiliser prices — that are expected to push food costs higher in the coming months. Rising natural gas costs feed directly into fertiliser production, a key input for farmers, so the energy shock is likely to reach supermarket shelves with a lag.
The energy shock has already lasted longer than many expected, Kazimir said, and its full consequences have not yet passed through to the economy.
Sources: Crypto Briefing, Investing.com
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