By Francesco Canepa

FRANKFURT (Reuters). Christian Hurtz’s jaw dropped when he saw that the electricity rate he had signed up for was more than three times higher than what he actually paid.

Cologne, Germany’s software developer, 41, was one of the millions who saw their energy bills rise as suppliers go out-of-business due to rising gas prices.

The rising cost of heating, lighting and operating a vehicle is impacting the budgets of many families.

Hurtz said that he initially thought it was for three months. The bill came from Hurtz’s provider of last resort, after his energy company had stopped providing.

My jaw dropped when I realized they were after it each month. “It spoiled my Christmas break a lot,” he said to Reuters.

Euro zone household averaged 1,200 euro per month on electricity and gas in 2020. BofA analysts believe that the figure could rise to 1,850 euros in 2019 as geopolitical tensions drive up energy prices, which will be difficult to offset by the limited supply from renewable resources.

Hurtz, along with hundreds of thousands other private energy companies’ customers that stopped receiving supply or went bankrupt last year – 39 of them in Germany – are now paying twice to three times what they were expecting.

Graphic: Feeling the heat yet?, https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnjykqpq/Pasted%20image%201642427654217.png CONSUMER BOOM?

The goal of this year was for consumer spending to drive growth, after the two-year COVID-19 lockdown and layoffs.

According to the European Central Bank, December saw a 4.2% increase in euro-zone economic growth due to a 5.9% rise in private consumption.

These forecasts are being questioned by higher energy costs that hit households at home as well as at the pump. Oil prices have risen half a percent and wholesale gas prices have quadrupled in one year.

Energy accounts for about 6% of the private consumption in Eurozone, but it could increase to 8-10% due to higher prices. According to ING estimates, this would reduce what you can spend on other goods.

Carsten Brzeski of ING said, “This would also correspond with previous episodes at higher energy prices,” he added.

It is possible that growth will suffer a significant hit.

According to Nomisma Energia, a consultancy firm, Italy’s gas and electricity prices could be cut by 2.9% on household consumption and 1.1% from GDP if they remain at their current levels.

Davide Tabarelli, chairman of Nomisma Energia stated that the weakness in Italian consumption is a major impediment to stronger GDP growth. He also said that 2022 levels of Italian consumption will only make matters worse.

Spain is suffering from a worsening economic picture. In December, economists at BBVA (MC) estimated that Spain’s growth would be 1.4%. These estimates were based upon market prices below the current level.

Miguel Cardoso, BBVA Research stated that price rises caused by higher demand are more beneficial than those which cause them. This isn’t the current state. “We are experiencing a negative supply shock.”

The RWI Institute in Germany estimated that consumer spending will not surpass pre-crisis levels until the second quarter 2022. It also stated that rising prices would likely deter major purchases.

France was an exception, as President Emmanuel Macron’s government, which is running for re-election in May 2017, has capped the electricity price rises at 4%.

Other countries are also taking energy subsidies into consideration, and other governments have taken similar steps.

According to BofA estimates, these won’t offset nearly a quarter the 54% rise in energy bills starting 2020.

Some people are already tightening up their belts.

Hurtz stated, “One has to really reduce,” It’s now that people need to ask themselves if the cheese is still affordable or whether they should purchase one on the lower shelves.