European Central Bank: Energy Prices Might Rise

Aimed at ongoing "geopolitical clouds" over Europe, with a tendency to worsen, the President of the European Central Bank (ECB) Christine Lagarde warned that energy prices might increase, having, as a result, an adverse impact on the entire European economy.

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Referring to a question about the potential escalation in Ukraine, the ECB President said that the cost would be high if the escalation occurred. "The geopolitical clouds that we have over Europe, if they were to materialize, would certainly have an impact on energy prices and through energy prices and increased cost, throughout the whole structure of prices," stated Lagarde during a briefing, after the ECB Governing Council meeting.

She explained that the geopolitical controversy it continues to exacerbate would have, as a result, a notable effect on prices growth as the incomes will be reduced. The ECB directive added, "the pure economic impact would be certainly significant than what we are seeing at the moment in terms of prices."

Last year, the European Union faced a record hike in energy prices, reaching 28.6% in the annual inflation rate of the energy sector and the natural gas costs rising by 68.7%.

The tensions around Ukraine have intensified in recent weeks, with NATO increasing concerns and Russia's military buildup at the Ukrainian borders. Last week, the European Council disclosed that Moscow would face "massive consequences and severe costs" if it invades Ukraine.

In the meantime, Russia maintains its status as the largest natural gas supplier to the EU with 46.8 percent of total gas imports, with 12.8 percent passing through Ukraine.