A Quantile Panel-Type Analysis of the Relationship Between Carbon Price and Energy Inflation in the EU-27

This paper examines the relationship between carbon prices and energy inflation within the EU-27 using a quantile panel-type causality approach. The results indicate that carbon prices significantly contribute to energy inflation at middle to high quantiles, whereas no causality is observed at low quantiles. These findings underscore the necessity for gradual adjustments in carbon pricing, promoting renewable energy, and providing targeted support for vulnerable households to mitigate the inflationary impacts while achieving climate objectives.