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Not all prices disinflate alike: disentangling the dynamics of sticky and flexible-price items

Author

Listed:
  • Höynck, Christian
  • Wieland, Elisabeth
  • Gandur, Lourdes Maria Zulli

Abstract

This box draws on micro price evidence on the frequency of price adjustments to disentangle the roles of sticky and flexible-price items in shaping recent disinflation dynamics in the euro area. Inflation of sticky core items has eased only gradually, while flexible core inflation has returned closer to its pre-pandemic average. Among subcategories, flexible goods drove the surge in non-energy industrial goods inflation, while the persistence of services inflation reflects contributions from both sticky and flexible-price items. The recent persistence of sticky core inflation underscores the roles of past cost shocks and elevated wage pressures. In view of its close link to long-term inflation expectations and the moderation of wage pressures, sticky core inflation is likely to disinflate further. JEL Classification: E31

Suggested Citation

  • Höynck, Christian & Wieland, Elisabeth & Gandur, Lourdes Maria Zulli, 2025. "Not all prices disinflate alike: disentangling the dynamics of sticky and flexible-price items," Economic Bulletin Boxes, European Central Bank, vol. 7.
    • Handle: RePEc:ecb:ecbbox:2025:0007:6
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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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