Today, gas prices in Europe are returning to more moderate levels and their volatility is declining, setting the stage for the convergence of inflation, over the medium term, to the ECB’s target of 2 per cent. In this context, the pricing strategies of businesses will play a central role.
In particular, we will have to closely monitor whether, after the pass-through of the higher energy costs observed in 2022, firms will allow final prices to reflect the most recent declines, which would imply a less intense tightening of financial conditions. This will be a key step to achieve a durable reduction of underlying inflation.