The direct, and perhaps most visible effect of globalisation for consumers, is its implication for relative prices. On the one hand, globalisation has dampened increases in euro area import prices of manufactured goods given a rising share of imports from lower-cost countries such as China and the new EU Member States.
On the other hand, rising demand associated with globalisation has contributed to the significant increases observed in world energy and other commodity prices. Although such relative price shocks do not necessarily affect inflation, prolonged short term impacts of sizeable relative price shocks could result, for instance, from adjustment frictions in the economy.