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Heterogeneity of inflation in the euro area: more complicated than it seems

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  • Christophe Blot

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Jérôme Creel

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • François Geerolf

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Sandrine Levasseur

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

We document different measures of inflation heterogeneity in the euro area. We ask what mostly drives this heterogeneity and whether there is cause for concern. Heterogeneity in headline inflation has increased substantially, and way more than heterogeneity in core inflation. We argue that core inflation dispersion is largely driven by small countries, where inflation reversion is the most likely. We then discuss about monetary policy as a limiting or aggravating factor of inflation heterogeneity.

Suggested Citation

  • Christophe Blot & Jérôme Creel & François Geerolf & Sandrine Levasseur, 2022. "Heterogeneity of inflation in the euro area: more complicated than it seems," SciencePo Working papers Main hal-03970416, HAL.
    • Handle: RePEc:hal:spmain:hal-03970416
    DOI: 10.2861/737138
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03970416
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