Higher inflation is mainly driven by energy and transport costs.

The table shows that fuel prices have accounted for much of the inflation seen since March 2026. This matches what many households experience in their daily lives. Fuel prices are highly noticeable, and rising prices at the petrol station can quickly create the impression that inflation is affecting everything. However, a closer look reveals that price increases are currently concentrated in a limited number of categories that are directly or indirectly linked to fuels. Particularly notable are the increases in the prices of fuels and lubricants, package holidays, accommodation services and transport services. These developments are closely linked to the recent rise in oil prices, which tends to feed relatively quickly into travel, transport and related energy-intensive services.

Not all prices respond at the same pace

Not every price reacts immediately when energy costs rise. One striking example is gas and electricity. Since February, these prices have actually been lower than a year earlier. Many households are still benefiting from energy contracts agreed before the conflict in the Middle East, when energy prices were falling rather than rising.

Food prices have also remained relatively stable so far. Historically, food prices have often been affected by developments in energy markets, but the table shows that food inflation has remained limited. There are several reasons for this. Abundant harvests earlier this year and ample global grain stocks have helped keep prices in check. In addition, higher energy and fertiliser costs usually take time to work their way through the food supply chain, meaning their effects on consumer prices are often delayed. Producers and traders may also adjust their production patterns and supply chains in response to higher costs, helping to absorb part of the impact.

Higher energy prices are still having only a limited impact

For the time being, price increases remain concentrated in products and services linked to energy. Prices for industrial goods and many other services are rising much more slowly. This suggests that the broader effects of higher energy costs have so far remained limited. Economists often refer to these as second-round effects. An example is when higher energy prices lead to higher wage demands, which in turn push up the prices of a wider range of goods and services. In other words, there is little evidence so far that these price increases are spreading widely across the rest of the economy.

Risk of broad-based inflation

At present, inflation is being driven mainly by a limited number of goods and services, particularly those linked to energy prices. However, this could change over time. As existing energy contracts expire, more households may be exposed to higher energy costs. In addition, increases in energy and fertiliser prices may gradually feed through into food prices. Geopolitical tensions could also put upward pressure on prices more broadly. For example, disruptions to major trade routes can increase transport costs, while shortages of raw materials or components can make production more expensive. Businesses may pass some of these higher costs on to consumers, resulting in price increases across a wider range of goods and services. If businesses subsequently raise prices to offset higher labour costs, inflationary pressures can become more widespread and persistent.

For this reason, central banks closely monitor not only the overall inflation rate, but also the underlying drivers of inflation. Whether inflation becomes more broad-based will depend on a range of factors, including geopolitical tensions and the duration of the conflict in the Middle East, the impact on key trade routes such as the Strait of Hormuz, developments in global supply chains, and the extent to which wages respond to higher prices.