Eurozone: The hypothetic return of inflation
|Jean-Luc PROUTAT
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Eurozone inflation is accelerating. This summer it rose to a little over 2% year-on-year, the highest level since 2012.
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Energy and food prices, the main drivers of this upturn, have increased significantly.
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Looking beyond these two relatively volatile categories, core inflation is still mild.
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This inertia can be attributed primarily to wages, which have not accelerated much despite the decline in unemployment and the hiring difficulties expressed by business leaders.
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In the eurozone, like in most of the advanced economies, the Phillips curve seems to have flattened: wages and prices are still responding to capacity pressures, but less so than in the past.
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This has implications for monetary policy as well as interest rates, which are bound to remain very low in the years ahead.
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