Inflation: on porridge, prices and the new normal

What do porridge and prices have in common? How do music and video streaming affect inflation? And is low inflation the new normal? Our host Michael Steen discusses with guests Christiane Nickel, Frank Smets, and ECB Chief Economist Philip R. Lane.

In this episode:

(00:45)

Keeping prices stable

Why should prices go up, what is the link between wages and prices, and how does working towards our inflation target help to stabilise the economy?

(12:07)

The new normal

How are changes in price measured, what factors drive inflation, and how do globalisation, demographics and e-commerce affect inflation?

(23:20)

Forecasting inflation

Why do central banks need to provide accurate forecasts, how are these forecasts produced, and why can this process be challenging?

The views expressed are those of the speakers and not necessarily those of the European Central Bank.

Published on 31 October 2019 and recorded on 10 and 14 October 2019.

Further reading

Explainer: Why are stable prices important?

https://www.ecb.europa.eu/explainers/tell-me-more/html/stableprices.en.html

Conference: Inflation in a changing economic environment

https://www.ecb.europa.eu/pub/conferences/html/20190923_inflation_conference.en.html

Speech: Monetary policy and below-target inflation

https://www.ecb.europa.eu/press/key/date/2019/html/ecb.sp190701~0c1fa3c8fc.en.html

Research: Low inflation in the euro area: causes and consequences

https://www.ecb.europa.eu/pub/pdf/scpops/ecbop181.en.pdf

Research: Expert group studying the causes of low inflation (LIFT)

https://www.ecb.europa.eu/pub/economic-research/research-networks/html/researcher_lift.en.html

Research: The impact of global value chains on the euro area economy

https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op221~38185e6936.en.pdf

Publication: Macroeconomic projections

https://www.ecb.europa.eu/pub/projections/html/index.en.html

European Central Bank website

https://www.ecb.europa.eu/