When oil and gas prices rise, people can end up paying more for essentials. The war on Iran has exposed this vulnerability again. Dependence on fossil fuels leaves people's living costs tied to conflict, disrupted supplies and volatile international markets.
Written by Dr Mauricio Vargas, an economist at Greenpeace Germany, and published by Greenpeace International, this report examines fossilflation, the inflationary pressure caused by rising fossil fuel prices. Drawing on data for the eurozone and Germany, it investigates how energy prices drive changes in inflation and how renewable energy and electrification can reduce exposure to price shocks.
Key findings
- Energy drove the total rise in eurozone inflation in 2026. The annual inflation rate increased from 1.7% in January to 3.2% in August. Energy's contribution more than accounted for that increase, while other components partly offset it.
- Without the oil-price shock, August inflation would have been substantially lower. The analysis estimates a eurozone inflation rate of 2.2%, rather than 3.2%, had oil prices remained at their January level.
- Energy has been a major source of inflation volatility. Energy accounted for 97% of fluctuations in the eurozone's overall inflation rate between January 2024 and August 2026. This measures movements in the inflation rate, not the proportion of every price increase caused by energy.
- Electrification and renewables can help protect people from fuel-price shocks. In a German household simulation using electric heating and transport, solar panels and battery storage, the modelled mix of consumer purchases rose in price by 1.5% between January and August 2026, compared with 2.5% for the official consumer basket. The simulation excludes upfront investment costs and does not guarantee the same savings for everyone.
Reducing fossil fuel dependence can help protect people's budgets
The report argues that replacing oil and gas with renewable electricity should be part of governments' response to rising living costs. Changing fossil fuel suppliers does not remove exposure to international fuel-price shocks. Investment in decentralised renewable energy, storage, electricity networks and electric heating and transport can help reduce that dependence.
Greenpeace calls for peace and action to protect people from the costs of fossil fuel dependence. Governments must make the transition accessible, including to people who cannot afford the upfront costs of cleaner energy and transport. Renewable energy is not just a climate tool; it must be taken as an urgent measure for peace and economic security.
Download the report:
Fossilflation: how oil and gas prices drive inflation and how households can be protected
