Weathering the Storm: The Socioeconomic Impact of the Energy Crisis

The majority of European countries are currently suffering from rampant inflation, a large part of which can be attributed to the rapid increase in energy prices. The Czech Republic has been particularly badly affected by the energy crisis, with inflation of almost 17% in February 2023. Therefore, this chapter examines in detail the general and energy inflation in the Czech Republic using data from the Czech Statistical Office, Eurostat, the ONS, and the OECD. More specifically, the chapter identifies those socioeconomic groups that have been most affected and which have sustained the largest financial losses since the commencement of Russian aggression against Ukraine, compares the position of the Czech Republic to rest of Europe, and reveals those groups that the government should primarily focus on in terms of optimising the impacts of supportive measures. The results show that the average Czech household suffered from a general inflation rate of 16.9% and an energy inflation rate of 35% between February 2022 and February 2023, losing 62,640 CZK overall and 18,010 CZK solely due to rising energy prices. This constitutes a loss of 12.2% of annual net household income due to overall inflation, and a loss of 3.5% of annual net household income due to energy inflation alone. Czech Republic is, therefore, ranked as the fourth most affected country in Europe. The most vulnerable socioeconomic groups have been identified as pensioners, the poorest families, single parents, and households in the smallest municipalities. Consequently, government support should primarily be targeted at these most affected groups.