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The dynamics of inflation differentials in the euro area

Author

Listed:
  • Allayioti, Anastasia
  • Beschin, Anna

Abstract

Euro area inflation differentials rose sharply during the pandemic and the energy crisis but have since largely returned to previous levels. Monitoring the evolution and nature of inflation differentials is informative when assessing the transmission of the single monetary policy. This box puts the recent developments in inflation dispersion into perspective. Headline inflation and its subcomponents have all experienced considerable divergences across countries, with energy and food inflation playing a significant role. However, with a few exceptions, these temporarily sizeable differentials did not result in substantial changes in relative price levels across countries. JEL Classification: E31, E58, E65

Suggested Citation

  • Allayioti, Anastasia & Beschin, Anna, 2024. "The dynamics of inflation differentials in the euro area," Economic Bulletin Boxes, European Central Bank, vol. 5.
    • Handle: RePEc:ecb:ecbbox:2024:0005:5
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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202405_05~6924b2283a.en.html
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    More about this item

    Keywords

    Cross-country heterogeneities; Inflation; Price levels;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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