A new look at oil price pass-through into inflation: evidence from disaggregated European data

Abstract

This paper analyzes oil price pass-through into inflation at disaggregate level for the euro area and its four main economies (France, Germany, Italy and Spain). The pattern of responses to oil price changes is quantitatively diverse across economies and across items of disaggregate inflation. Moreover, we suggest an alternative method to the direct calculation of aggregate effects on inflation given that indirect and second-round effects may offset the positive effects found in energy inflation and dissipate the effect on total inflation.