Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
Energy prices surge again, but the inflation outlook is different from 2022
The war in the Middle East has once again exposed the global economy to an adverse energy shock with broader commodity-market spillovers. Estimates suggest that consumer prices will rise in the coming years, particularly for transport, food, housing-related costs and restaurants. Consequently, inflation will increase even with the typical countervailing monetary policy responses. Inflation risks depend on how long prices remain elevated, as persistence raises the risk of broader wage and price responses. However, 2026 differs from 2022, both because the shock itself is different and because economic conditions are different. Uncertainty is extraordinarily high and new developments could alter the outlook.
Key messages
Why is it important?
Understanding how energy price shocks pass through to consumer prices is central to meeting Danmarks Nationalbank’s mandate of ensuring price stability. With upstream price pressures rising, and uncertainty at exceptionally high levels, a careful analysis of what has happened in 2026 and why the situation differs from 2022 is essential for assessing future developments and the risks ahead.
Main chart
Oil price shocks lead to higher inflation, but the impact varies in size and timing across different consumer prices
Effect on Danish consumer prices after 12 and 24 months following a 50 per cent oil price shock that fades along the path implied by futures markets as of March 2026
Note:
The chart answers the following question: what happens to Danish consumer prices if the oil price follows the path implied by futures markets in March 2026, two weeks after the war in the Middle East began?” Figure 6a shows the exact oil price path used, and the main text elaborates on the methodology. In short, the effects on consumer prices are estimated using a structural scenario analysis (Antolín-Diaz, Petrella and Rubio-Ramírez, 2021), in which we first estimate the typical response to oil price shocks and then simulate the effects on consumer prices of a specific oil price path. The model assumes that monetary policy responds to the oil price shock as it historically has. Note that this does not represent Danmarks Nationalbank’s inflation forecast, which is presented in Danmarks Nationalbank (2026a).
Source:
Känzig (2021), Eurostat and authors’ own calculations.