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Exchange Rate Pass-Through to Domestic Prices

Author

Listed:
  • Reddan, Paul

    (Central Bank of Ireland)

  • Rice, Jonathan

    (Central Bank of Ireland)

Abstract

Even by euro area standards, Irish goods inflation remained very weak throughout 2016. This Letter provides empirical evidence that Irish consumer goods price inflation is particularly exposed to movements in the euro-sterling exchange rate - notwithstanding factors such as global prices, interest rates and domestic consumption. This exposure of Irish consumer prices to sterling currency movements is shown to closely explain price dynamics throughout 2016, in particular for the period following the British vote to leave the EU.

Suggested Citation

  • Reddan, Paul & Rice, Jonathan, 2017. "Exchange Rate Pass-Through to Domestic Prices," Economic Letters 08/EL/17, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:08/el/17
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    References listed on IDEAS

    as
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    7. Jonathan McCarthy, 2007. "Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 511-537, Fall.
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    Cited by:

    1. Pınar GÖKTAŞ, 2019. "Asymmetric Transition Effects of the Exchange Rate on Consumer Prices in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(42).
    2. Camatte, Hadrien & Daudin, Guillaume & Faubert, Violaine & Rifflart, Christine, 2023. "Estimating the elasticity of consumer prices to the exchange rate: An accounting approach," Journal of International Money and Finance, Elsevier, vol. 137(C).
    3. Lawless, Martina & Morgenroth, Edgar, 2018. "Brexit and Irish Consumers," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    4. McQuinn, Kieran & O'Toole, Conor & Economides, Philip & Monteiro, Teresa, 2018. "Quarterly Economic Commentary, Spring 2018," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC2018SPR, march.
    5. Boyd, Laura & Keenan, Enda & McIndoe-Calder, Tara, 2023. "Earnings growth under high inflation," Quarterly Bulletin Articles, Central Bank of Ireland, pages 89-123, September.

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