The Euro Area has faced a number of inflationary shocks in the past two years, from pandemic-related supply chain disruptions as well as strong demand once restrictions were lifted, to sharp rises in energy and food prices due to the Russia's aggression. Inflation was 9.2 per cent in December 2022, down from 10.1 per cent in November, mainly due to falling energy costs.
The outlook is for a decline to 6.3 per cent in 2023 and 3.4 per cent in 2024 reflecting moderating energy inflation and the impact of the ECB's monetary policy decisions. Monetary Policy Despite the recent easing of inflation, it remains too high. High and volatile inflation entails large costs for the economy and society as a whole.