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Macroeconomic policy developments: monetary policy

Figure 1.25 Monthly headline and core inflation: annual change (%) in the EU and euro area (2008M1–2018M11) Source: Eurostat (prc_hicp_manr series). -1


Cautious rolling back ofunconventional monetary policymeasures as economic outlookseems to improve

Despite headline inflation reaching and surpassing the 2% target in the second half of 2018 in both the euro area and the EU, core inflation (the inflation rate which does not includethe usually volatile evolution of prices of commodities such as energy and unprocessed food) remained steady at its late 2017 values of between 1.1 and 1.3%, and well below 1.9%.  The lifting of the euro area out of its persistent low inflationwas mainly due to surging energy costs in recent months, and to a much smaller degree to rising food, alcohol and tobacco costs. While there was a hike in energy prices to an annualised rate of around 9% since the summer months of 2018, services and non-energy industrial goods remainedwell below 2%. Although wage growth has picked up in 2018 (see Chapter 3), the low core inflation numbers still indicate the fragility of the recovery and the identified risks to which it is subject.

more information in  Benchmarking Working Europe 2019 chapter 1  'Macroeconomic developments in Europe: tackling the growth, inequality and climate change challenges'

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Politique économique


Mehmet Koksal

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