This paper evaluates the effects of rising energy commodity prices on euro-area inflation in 2021-22. The analysis relies on a wide range of empirical models and focuses especially on the period that started with the dramatic rises in energy prices.
We estimate that rising energy prices contributed, both directly and indirectly, to roughly two thirds of euro-area inflation in 2022. Their contribution to core inflation (i.e. excluding energy and food components) appears to have ranged between 20 and 30 per cent and was somewhat larger in the last quarter of the year (between 20 and 50 per cent). There is also evidence of an appreciable increase in the pass-through of energy prices to core inflation following the outbreak of the pandemic.