Harmonised Index of Consumer Prices

Underlying inflation measures: an analytical guide for the euro area

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How have unit profits contributed to the recent strengthening of euro area domestic price pressures?

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Friday, June 30, 2023
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Survey on the Access to Finance of Enterprises in the euro area - October 2022 to March 2023

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Monday, June 19, 2023
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How have higher energy prices affected industrial production and imports?

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Monday, February 20, 2023
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This box analyses how the increase in energy prices since autumn 2021 has affected euro area aggregate industrial production and import volumes.

Key Points: 
  • This box analyses how the increase in energy prices since autumn 2021 has affected euro area aggregate industrial production and import volumes.
  • Between September 2021 and October 2022 average euro area consumer and producer energy prices increased by 49.5% and 93.4% respectively.
  • In the same period euro area industrial production excluding construction and import volumes excluding energy grew by 2.3% and 10.3% respectively.
  • These developments are in line with the expectation that adverse energy supply shocks raise production costs, which can cause a drop in output and an increase in imports from countries that are less dependent on global energy production.
  • [1] Euro area countries imported more in sectors relatively more exposed to increases in energy prices from trade partners that were less affected by the energy price shock.
  • Euro area industrial production and imports
    a) Manufacturing industrial production by sub-sector
    (percentage changes in industrial production and percentage point contributions relative to January 2020)

    b) Manufacturing import volumes by sub-sector
    (percentage changes in import volumes and percentage point contributions relative to January 2020)

    Sources: Eurostat, Trade Data Monitor and ECB staff calculations.

  • Low (high) energy-intensity sectors are defined as those with an energy intensity lower (higher) than that of the median sector.
  • Manufacture of coke and refined petroleum products is excluded as it is part of the energy industrial grouping.
  • At the same time, energy-intensive production sectors faced much higher energy costs in 2022, and this was behind the drop in output.
  • Empirical analysis confirms that energy supply issues and bottlenecks in production processes played a key role in the developments in aggregate industrial production and aggregate import volumes (excluding energy) in 2022.
  • The analysis uses the Harmonised Index of Consumer Prices (HICP), industrial production (excluding construction), Purchasing Managers’ Index (PMI) suppliers’ delivery times, consumer energy prices and import volumes of goods excluding energy.
  • The assumed sign restrictions at impact are as follows: demand shocks imply HICP (+), HICP energy (+), industrial production (+), import volumes (+) and PMI suppliers’ delivery times (-); energy supply shocks imply HICP (+), HICP energy (+), industrial production (-) and PMI suppliers’ delivery times (-); supply chain disruption shocks imply HICP (+), industrial production (-) and PMI suppliers’ delivery times (-); other supply shocks imply HICP (+) and industrial production (-); foreign shocks imply HICP (-), industrial production (-) and import volumes (+).
  • Marginal effects of imports on production in industries with different energy intensities (the higher the percentile, the higher the energy intensity)
    (x-axis: percentile of energy cost increase; y-axis: correlation coefficient)

    Sources: Eurostat, Trade Data Monitor and ECB calculations.

Luis de Guindos: Outlook for the euro area economy and financial stability

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Saturday, November 26, 2022
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I will start by providing an overview of the euro area economic outlook that underpinned Octobers Governing Council deliberations.

Key Points: 
  • I will start by providing an overview of the euro area economic outlook that underpinned Octobers Governing Council deliberations.
  • I will then discuss how we see the risks to financial stability.I will start by providing an overview of the euro area economic outlook that underpinned Octobers Governing Council deliberations.
  • I will then discuss how we see the risks to financial stability.
  • But as we know, the euro area growth outlook has deteriorated significantly since then.
  • In fact, the euro area economy grew by 0.2% in the third quarter of this year, significantly slower than in the second quarter.
  • By reducing peoples real incomes and pushing up costs for firms, high inflation continues to dampen consumption and investment.
  • Moreover, global economic activity is growing more slowly, reflecting the impact of continued high inflation, tightening financial conditions and elevated geopolitical uncertainty.
  • As the prices paid for imports rise faster than those received for exports, worsening terms of trade are weighing on incomes in the euro area.
  • In our Financial Stability Review of November 2021, we underlined the impact of improved economic conditions in reducing risks to financial stability.
  • Since then, the outlook for financial stability has been downgraded twice: in our Financial Stability Review of May 2022, and the one to be published this week, which sets out how deteriorating economic and financial conditions have further increased risks to the stability of the euro area financial system.
  • Repricing risks and liquidity difficulties render financial markets and non-bank financial institutions vulnerable to disorderly risk adjustments.
  • Furthermore, longer-term fragilities persist associated with low cost-efficiency, limited revenue diversification and remaining overcapacity in parts of the euro area banking sector.
  • We will proceed with prudence, continuing to normalise our monetary policy in line with our medium-term price stability objective.

Luis de Guindos: The euro area economy and the energy transition

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Friday, November 11, 2022
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Madrid, 4 November 2022

Key Points: 
  • Madrid, 4 November 2022
    I am very pleased to be taking part in this event on the important topic of the energy transition and its impact on the economy.
  • I will consider the impact of energy price developments on inflation before discussing the green transition and how climate change is taken into account in our monetary policy framework.
  • Growth in the euro area is estimated to have slowed down significantly in the third quarter of this year, with real GDP growing at 0.2%.
  • Demand for services is decelerating following the strong rebound that came with the reopening of the economy over the summer, especially in tourism.
  • The continued weakening in global demand, also in the context of tighter monetary policy in many major economies, and the worsening terms of trade mean that there is less support for the euro area economy.
  • The depreciation of the euro has also added to the build-up of inflationary pressures.
  • Price pressures are evident in more and more sectors, in part owing to the impact of high energy costs feeding through to the whole economy.
  • The unprecedented energy price developments and the ensuing energy crisis are posing challenges in various ways.
  • In fact, a trade-off between energy security, the green transition and price stability may be emerging.
  • The current energy crisis has left Europe at a crossroads, presenting challenges as well as opportunities for the green transition.
  • To counter the sharp rise in energy prices, many governments adopted expensive and broad-based support measures for households and firms.
  • But these measures risk diluting relative price signals that are crucial to incentivise energy saving and foster green investment.

Meeting of 7 July 2021

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