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The impact of higher energy prices on services and goods consumption in the euro area

Author

Listed:
  • Bobasu, Alina
  • Gareis, Johannes

Abstract

This box examines the impact of the recent increase in energy prices on real consumer spending in the euro area. The empirical framework relies on a structural vector autoregression (SVAR) model and identifies adverse energy supply shocks that lead to a deterioration in the terms of trade, as captured by the ratio between the GDP deflator and the private consumption deflator, and a decline in real consumer spending. It finds that energy supply shocks have significantly weighed on total private consumption in recent quarters, with durable goods consumption being particularly affected. JEL Classification: E31, E21

Suggested Citation

  • Bobasu, Alina & Gareis, Johannes, 2023. "The impact of higher energy prices on services and goods consumption in the euro area," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2023:0008:3
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2023/html/ecb.ebbox202208_03~2ca54e2b1b.en.html
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    More about this item

    Keywords

    durable goods; energy supply shocks; Private consumption;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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