Level of consumer prices in Euro area is above that would have materialized if the pre-pandemic growth rate from 2017-2019 would have been preserved during pandemic period (January 2020 – October 2021). Assessment is valid both for overall consumption basket (HICP) and for core inflation aggregate (HICP excluding energy and food).
Still, there is some good news for ECB: the positive gap is not very large for core inflation measure. This should explain the strong ECB patience on preserving the very accommodative monetary policy stance.
Reopening of economy triggered a strong advance in prices paid by consumers in 2021. Especially increases of energy prices were very large this year. However, a larger than usual increase was observed during pandemic period for prices of non-food manufactured products, while advance in tariffs of services accelerated recently (in September and October).
