This is also related to those countries becoming more competitive by keeping wage growth in check. This, too, dampened price pressures. The ECB estimates that domestic factors such as these have lowered core inflation by up to one percentage point relative to the United States.1 On top of domestic factors came commodity prices: 2014 saw the beginning of a steep decline in oil prices.
From then on, this replaced weak domestic demand as the main factor behind the low inflation. Dwindling commodity prices knocked almost one percentage point off headline inflation. I should also mention three more secular forces that are sometimes put forward as explanations for the persistently low inflation: globalisation and the ageing populations in many advanced economies.