The dynamics of inflation differentials in the euro area

Anastasia Allayioti and Anna Beschin

Economic Bulletin Boxes, 2024, vol. 5

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

Keywords: Cross-country heterogeneities; Inflation; Price levels (search for similar items in EconPapers)
Date: 2024-08
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