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Monetary policy pass-through to goods and services inflation: a granular perspective

Author

Listed:
  • Allayioti, Anastasia
  • Fagandini, Bruno
  • Gόrnicka, Lucyna
  • Martínez Hernández, Catalina

Abstract

This box analyses the heterogeneous pass-through of monetary policy to goods and services inflation. The granular analysis examines the 72 prices of goods and services that comprise the Harmonised Index of Consumer Prices excluding energy and food (HICPX). Using an empirical model, we classify HICPX prices according to their sensitivity to monetary policy shocks, which varies considerably across items. While sensitive items account for a larger share of non-energy industrial goods than of services, the price responses of sensitive services are similar to those of sensitive goods. The March 2023 peak in the HICPX was driven by both sensitive and non-sensitive items. Recent data show a marked decline in the contribution of sensitive items, with non-sensitive services driving around two-thirds of recent HICPX inflation developments. JEL Classification: E31, E52, C32

Suggested Citation

  • Allayioti, Anastasia & Fagandini, Bruno & Gόrnicka, Lucyna & Martínez Hernández, Catalina, 2025. "Monetary policy pass-through to goods and services inflation: a granular perspective," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2025:0008:5
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    More about this item

    Keywords

    C32; E52; HICP; HICP excluding energy and food; monetary policy transmission E31;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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