The European Central Bank warned that a surge in natural gas prices will likely be passed into eurozone inflation faster than in the past, but because of growth in renewable production it has a smaller effect on electricity costs.

The bank wrote in its economic bulletin on Monday that wholesale gas prices have risen by more than 140% compared with last year, because the war between the United States and Israel with the Islamic Republic has limited global supply. Low levels of Europe’s reserves also raise the risk of further price increases.

Based on a survey by eurozone central banks, the change in wholesale gas prices is passed through to gas inflation in more than half of the countries in the region within one to three months. The share of countries with slow pass-through—meaning 13 to 24 months—has fallen since 2022 from about 40% to about five percent.