'Remarkable' drop in gas prices may lead to only small fall in inflation 

'We’re one cold snap away from European natural gas prices rebounding,' cautions economist Neil Shearing 

Sparse snowfall in Lenggries, Germany. Unseasonably warm weather in much of Europe contributed to the drop in wholesale prices as governments built up stockplies of gas. Picture: Sven Hoppe

The recent “collapse” in wholesale gas prices will not automatically lead to a significant slowing in consumer price inflation, though it will likely give more room for governments to decide over continuing subsidies for households and business energy bills, a leading economics consultancy has said.

Capital Economics said government energy subsidies had helped stop the full effects of soaring gas costs pushing up consumer prices across Europe, and the drop in wholesale gas prices will have a less dramatic effect on consumer prices as a result.