The European Central Bank published a Working Paper analysing how consumer price stickiness changed across the euro area during the 2021–2024 inflation cycle, using consumer price index (CPI) micro data from nine countries. The paper finds that consumer prices became materially more flexible at the height of the surge, with firms changing prices more often mainly through more frequent price increases, before adjustment frequencies moved back close to pre-pandemic norms by late 2024, except in services. The ECB noted the paper reflects the authors’ views. The analysis draws on around 190 million price quotes and a common sample of 166 product categories covering about 60% of the Harmonised Index of Consumer Prices (HICP) basket excluding energy, with the nine countries representing roughly 83% of the euro area HICP. Excluding sales, the share of prices changing in a given month rose from an average 8.2% in 2010–2019 to 12.0% in 2022, peaking at 15.7% in January 2023, then fell quickly in 2023 and more slowly in 2024; the decline was faster for food and non-energy industrial goods than for services, where frequencies remained elevated. The surge was driven primarily by a higher incidence of price increases, with the share of increases among all price changes rising to 82% in 2022 from around two thirds pre-2020, while the average size of individual price rises and cuts changed only modestly; products with a higher imported-energy cost share showed larger increases in adjustment frequency. Hazard-rate evidence indicates the probability of adjustment rises with the gap between actual and estimated optimal prices, consistent with state-dependent pricing, and a macro model exercise suggests peak inflation would have been almost 1 percentage point lower if the frequency of price changes had not responded to the inflation surge.
European Central Bank 2026-02-09
European Central Bank publishes working paper showing euro area monthly price changes rose to 12% in 2022 and peaked at 15.7% in early 2023
The European Central Bank's Working Paper reveals that euro area consumer prices became more flexible during the 2021–2024 inflation cycle, with increased price change frequency, particularly through hikes, before returning to near pre-pandemic levels by late 2024, except in services. The analysis, based on extensive CPI micro data, indicates the surge in adjustments was primarily driven by price increases, notably impacting products with higher imported-energy costs.