The sharp increase in energy prices has caused inflation and the cost of living to rise across the European Union, hitting low-income families the most, according to the Spanish newspaper El Mundo.
 
The newspaper stated in a report published on its website that high energy prices, including natural gas, have led to a rise in electricity prices and the cost of living for families across the European Union, prompting governments to cut taxes and provide financial support amounting to several billion euros. .
 
She pointed out that a series of reports published by the Cambridge Economicometrics Research Office in October and November showed that households in European Union countries spend much more on energy than in 2020, and that governments spend billions of euros to help consumers pay bills and reduce taxes. .
 
She added that in France, for example, the poorest households now spend almost a third more on energy than they did in 2020, and between August 2020 and August 2022, household energy prices increased by 37%, while overall inflation increased by 9.2%.
 
She added that the increase in household energy prices makes the average French household €410 worse off in 2022 than in 2020, mostly due to higher gas prices.
 
In response to high energy prices, the French government has adopted price ceilings and support measures that are expected to cost more than 71 billion euros, equivalent to 2.9 percent of France's GDP, according to the newspaper.
 
In Italy, fossil fuels alone were responsible for nearly 30% of the country's annual inflation rate during the spring of 2022, according to Cambridge Economics.
 
The report found that unlike other European countries, retail prices for electricity exceeded other energy prices in Italy, and were 112 percent higher in July 2022 than in August 2020, and in the same time period retail prices for petrol increased by 14 percent and diesel by 22 percent. and natural gas by 42%.
 
"We estimate that before government subsidies, the average Italian household will spend about 1,400 euros on energy and fuel bills this year compared to 2020, and low-income households are the most affected by higher energy prices," the report said.
 
The magazine added that natural gas dominates electricity production in Italy, which also led to higher electricity prices. In 2010, natural gas accounted for 50% of total electricity production, and the share of natural gas fell to 33% in 2014, but it rose again. , to reach 48% in 2021, and 56% in the first half of 2022.
 
In Spain, low-income households now spend an estimated 70% more on energy than they did in 2020, which is why the Spanish government has intervened heavily in energy markets by cutting taxes, introducing cash transfers to households, and fixing the price of natural gas for power generators. This led to lower electricity prices compared to many other EU countries.
 
These support measures are expected to cost the Spanish government more than €35 billion, roughly three percent of Spain's GDP, yet consumers will still feel the brunt of the rising cost of living.
 
High inflation is also a real challenge in Germany, Europe's largest economy, due to higher gas prices. "We estimate that the current increase in energy prices is making the average household of €735 worse off in a year," Cambridge Economics said in its Germany-focused report. 2022 compared to 2020, mostly due to higher gas prices.
 
The German government has introduced a number of support measures to help households, businesses and industry pay their energy bills, including price caps that are expected to come into effect in March next year.
 
Moreover, the state will pay household energy bills for December this year, according to the report. These interventions will mitigate the impact of price hikes "to some extent," but the aid measures are expected to cost the government nearly five percent of GDP.
 
In addition to gas, higher coal prices have also led to higher inflation in some countries. In Poland, which relies heavily on coal for electricity generation, fossil fuels accounted for nearly 40 percent of Poland's total annual inflation rate last June, which amounted to more than 14%.
 
The price of household coal, which is widely used to heat Polish homes, increased by 157 percent between August 2021 and August 2022. The rise in energy prices in Poland is partly due to the sanctions imposed by Poland and the European Union on Russian gas and coal.
 
Meanwhile, the Polish government has spent nearly $10 billion capping coal prices, freezing electricity prices until the end of 2023, as well as directing subsidies and cash transfers to households.
 
In the long run, Cambridge Economics said, the electrification of heating and transport, as well as the widespread deployment of renewables, could lower energy prices and reduce the need for costly government intervention in the EU when fossil fuel prices rise.
  Source: The Seventh Day website