ECB, (2017), “Domestic and global drivers of inflation in the euro area” , ECB, June
This article discusses the role of domestic and global drivers of inflation in the euro area and whether and how their relative importance has changed over time. Domestic price pressures result mainly from wage and price-setting behaviour, which is closely linked to the domestic business cycle. In respect of external drivers, import prices – especially of commodities – naturally play an important role in the development of domestic headline inflation, for example via energy and food inflation. However, more recently it has been argued that global integration has increased the influence of the global business cycle on domestic inflation and thereby also supported a convergence of inflation developments across the globe.
Relevant Posts
- Ciccarelli, Matteo, Osbat, Chiara, (2017), «Low inflation in the euro area: Causes and consequences», ECB Occasional Paper Series No 181, January
- Eurostat/ Euro area annual inflation up to 1.8%- 31 January 2017