How Different is Euro Area and US Inflation?

Dilan Aydın Yakut

No 2/EL/23, Economic Letters from Central Bank of Ireland

Abstract: Larger and more sustained energy and commodity price shocks as a result of the war in Ukraine are contributing to higher headline inflation in the euro area (EA), when compared with the US. Underneath the headline numbers, trend inflation – something monetary policy-makers pay close attention to in order to get a sense of persistence in inflation dynamics – is still lower in the EA, mainly due to lower services inflation. However, this gap in trend inflation is gradually closing and even slightly reversed recently when owneroccupied housing services costs are excluded from US inflation.

Date: 2023-02
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