Dynamic inflation responses to war-related electricity shocks: DTW-based evidence from European energy and renewables regimes

Russia’s invasion of Ukraine turned wholesale electricity prices into a major, but uneven, driver of inflation across Europe. The article aims to quantify dynamic inflation responses to war-related electricity shocks and to identify distinct energy–inflation regimes conditioned by renewables penetration and structural characteristics. The analysis uses a balanced monthly panel of 26 European countries (2019–2025), combining two-way fixed-effects regressions with event-time “excess” inflation profiles and correlation- and clustering based on Dynamic Time Warping. Early-phase excess inflation around February 2022 ranges from about 0.53 percentage points (cluster 6) to 1.06 percentage points (cluster 3), with clusters 1 and 5 also showing strong overshoots (≈0.94–0.91), while only clusters 1 and 3 sustain elevated excess inflation in the medium phase (≈0.71–0.76) and all regimes converge to within –0.07 to +0.16 by the late phase. DTW clustering reveals six regimes with distinct pre-war configurations of electricity prices (approximately 49–59 EUR/MWh), renewable energy shares (approximately 24–55%), and unemployment rates (approximately 4.45–8.59%). A heterogeneous-slope FE model shows that a 100 EUR/MWh electricity shock raises the monthly HICP by only 0.03 percentage points in cluster 3 and 0.09 in cluster 5. In contrast, the effects in other clusters are small and statistically insignificant, confirming a highly uneven and often muted pass-through.