Energy has been the main contributor to headline inflation for the past 18 months (Chart 1). Higher energy input costs have contributed to extraordinarily high food inflation. They have been a key driver of goods and services inflation (Chart 2).
And by dragging down the trade balance and weighing on the economic outlook, they are contributing to the depreciation of the euro, further reinforcing inflationary pressures (Chart 3). Chart 1 Contributions of components of euro area headline HICP inflation (annual percentage changes and percentage points contributions)  Sources: Eurostat and ECB calculations. Notes: NEIG stands for “non-energy industrial goods”.