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What contributes to consumer price inflation? A novel decomposition framework with an application to Austria

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  • Martin Schneider

    (Oesterreichische Nationalbank)

Abstract

This paper introduces a novel approach to decomposing consumer price inflation. Expanding upon the established decomposition method for the value-added deflator, our methodology combines the cost structure of the consumption expenditures from the input–output table with quarterly national accounts data. This enables a detailed breakdown of HICP inflation, including imports. Applying this method to Austria from Q1 2019 to Q1 2023, we identify energy and non-energy imports as major contributors to inflation in 2022. Profits began contributing to inflation from H2 2022, while wage pressures remained minimal. The results of the analysis show that the decomposition can provide valuable insights for the conduct of monetary policy.

Suggested Citation

  • Martin Schneider, 2025. "What contributes to consumer price inflation? A novel decomposition framework with an application to Austria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 14(1), pages 1-26, December.
    • Handle: RePEc:spr:jecstr:v:14:y:2025:i:1:d:10.1186_s40008-024-00342-1
    DOI: 10.1186/s40008-024-00342-1
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    More about this item

    Keywords

    Consumer price inflation; Production-side decomposition; Inflation accounting;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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