German inflation probably won’t be as bad as after the pandemic, but a long list of threats could push prices up more than currently expected, the Bundesbank said.

Among the most pronounced dangers are elevated or rising commodity prices and increasing costs for food, non-energy goods and services, the German central bank said Monday in a report dissecting current dynamics.

“Given the different combination of shocks, a repeat of the high-inflation phase of 2021–22 currently seems unlikely,” it said. “However, inflation risks are clearly tilted to the upside.”

Euro-zone officials expect inflation to remain high in the coming months due to the Iran war. European Central Bank President Christine Lagarde said Saturday that price growth will stay “well above target into the first half of 2027.”In contrast to a few years ago, the current shock is more concentrated on oil and refined products, while natural gas and electricity, which are particularly significant for Germany, are less affected, the Bundesbank said. There are also no parallel developments pushing up food costs, while demand and labor markets are weaker, it added.

“Under these conditions, companies are less likely to adjust prices more frequently or pass on cost shocks to a greater extent than usual,” it said.

The ECB is expected to raise interest rates for a third time this year in December, to 2.75%. That would be well below the 4% peak seen in the previous inflation episode and slightly above a range within which borrowing costs are deemed to have a neutral impact on the economy.

The ECB has repeatedly said inflation risks are skewed to the upside, with officials warning that the longer the situation in the Middle East remains unresolved, the more likely it is that higher energy costs will start spilling into the broader economy.