IDEAS home Printed from https://ideas.repec.org/a/ecb/ecbbox/202300035.html
   My bibliography  Save this article

Indicators for producer price pressures in consumer goods inflation

Author

Listed:
  • Rubene, Ieva

Abstract

The increase in consumer goods price inflation in the euro area over the last two years was preceded by a sharp rise in producer prices. Producer price indices (PPIs) capture the prices of goods at the time when these goods leave factory gates. Simple correlation analysis suggests that the strength of the link between producer and consumer price indices can vary over time. Indicators of producer price pressures on consumer price inflation (IPPIs) are constructed using dynamic impulse responses of consumer prices to changes in producer prices (elasticities), obtained with the local projections (LP) estimation method. The IPPIs based on these elasticities and actual PPI data suggest a significant increase in underlying cost pressures over the course of 2022. The level of these pressures remained high for both non-food consumer goods and food products in early 2023. Overall, IPPIs can help to assess the strength and direction of the underlying pressures on NEIG and food prices, but they remain subject to several caveats. JEL Classification: E31, E37

Suggested Citation

  • Rubene, Ieva, 2023. "Indicators for producer price pressures in consumer goods inflation," Economic Bulletin Boxes, European Central Bank, vol. 3.
    • Handle: RePEc:ecb:ecbbox:2023:0003:5
    as

    Download full text from publisher

    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2023/html/ecb.ebbox202303_05~e6d2439ece.en.html
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Consumer prices; cost pressures; food prices; inflation; non-energy industrial goods prices; producer prices;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecb:ecbbox:2023:0003:5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Official Publications (email available below). General contact details of provider: https://edirc.repec.org/data/emieude.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.