The Fairy Tale of Low Inflation in the Euro Area

Hochstein Martin ()
Additional contact information
Hochstein Martin: Allianz Global Investors GmbH Frankfurt, Global Economics and Strategy, Bockenheimer Landstraße 42, Frankfurt am Main, Germany

The Economists' Voice, 2018, vol. 15, issue 1, 4

Abstract: There are strong indications that actual consumer inflation in the euro area is understated by official price measures. The exclusion of homeowner shelter costs and inadequate quality adjustments for certain basket items are among the reasons for a potential downward bias in Eurostat's Harmonised Index of Consumer Prices, which would have widespread ramifications not only for consumers but also for the broader economy and financial markets. By focusing on the HICP as a yardstick for its primary objective of medium-term price stability, the European Central Bank relies on a too narrowly defined and error-prone inflation concept.

Keywords: Downward inflation bias; HICP; Hidden inflation; Inflation mismeasurement; Owner-occupied housing costs (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/ev-2018-0025 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:evoice:v:15:y:2018:i:1:p:4:n:6

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ev/html

DOI: 10.1515/ev-2018-0025

Access Statistics for this article

The Economists' Voice is currently edited by Michael Cragg, Dwight Jaffee and Joseph Stiglitz

More articles in The Economists' Voice from De Gruyter
Bibliographic data for series maintained by Peter Golla ().