Internal Market, Industry, Entrepreneurship and SMEs
Decomposing producer price inflation in the euro area – quarterly update
Updated every quarter, this indicator provides a measure of the relative importance of supply and demand factors in determining the inflationary pressure in the euro area.
Key messages of this edition
in the last quarter of 2022, producer price inflation in industry is starting to decrease, in the euro area, in line with the data about headline consumer price inflation
from 31.6% in 2022 Q3, producer price inflation in industry has decreased to 21.7%
this decrease is driven by disinflationary trends in both demand and supply
monetary policy action is likely determining the disinflationary trend of demand factors
however, supply chain factors, in particular shortages of equipment and material, continue to play a significant role in driving inflationary pressures
the decomposition suggests that the current inflationary pressure continues to be primarily driven by supply shortages (around 85% of the total pressure), with demand boosts accounting for only a small portion (around 15%).