2012年-ECB欧洲央行_The_development_of_prices_and_costs_during_the_2008-09_recession_15页_732kb

Summary of the Development of Prices and Costs During the 2008-09 Recession

Core Content

This document analyzes the behavior of inflation and its components during the 2008-09 recession in the euro area, comparing it with historical trends. It highlights the unique characteristics of the 2008-09 recession and explores the underlying factors influencing inflationary pressures, particularly the role of commodity prices, labor costs, and monetary policy.

Main Views and Key Information

1. Inflation Trends During the 2008-09 Recession

• Headline HICP inflation fell sharply, from around 4% to nearly -1%, reflecting the severe economic downturn.
• HICP inflation excluding food and energy declined much less, by only 1.2 percentage points, despite the recession's depth.
• The overall HICP inflation dropped by 4.7 percentage points, while the excl. food and energy component only by 1.2 percentage points.
• The post-recession rebound in overall HICP inflation was stronger than that of the excl. food and energy component.

2. Normalised Inflation Movements

• Charts 2 and 3 show that the normalised movements in overall HICP inflation were significantly different from historical patterns.
• The excl. food and energy component followed a more familiar pattern, suggesting that its behavior is more aligned with domestic economic conditions.

3. Impact of Commodity Prices

• Commodity price fluctuations had a strong influence on the food and energy components of HICP inflation.
• The sharp decline in oil prices during the 2008-09 recession (from ~$150 to ~$40 per barrel) was unprecedented in speed and magnitude.
• The recession coincided with a global economic cycle, with emerging economies playing a key role in shaping global oil demand.
• The impact of oil price changes on HICP inflation depends on the price level, with higher prices leading to a larger effect on inflation.
• The weight of energy in the HICP basket increased due to rising consumption and prices, amplifying the effect of energy price changes on overall inflation.

4. Role of the Common Agricultural Policy (CAP)

• The CAP historically mitigated the transmission of global food price shocks to HICP inflation.
• However, after 2006, international food prices exceeded CAP intervention prices, reducing the policy's dampening effect.
• This led to a greater influence of international food price volatility on HICP inflation during the 2008-09 recession.

5. Indirect and Second-Round Effects

• Commodity price changes also affect HICP inflation indirectly through input costs and second-round effects through wage-setting and inflation expectations.
• These effects typically take longer to materialize than direct effects, and were less pronounced during the 2008-09 recession.
• The limited response of HICP inflation excluding food and energy may be due to weakened second-round effects and structural changes in the economy, such as lower energy intensity and more anchored inflation expectations.

6. Labour Market Rigidities and Inflation Responsiveness

• Labour costs account for around 27% of total production input costs in the euro area.
• During the 2008-09 recession, unit labour costs actually increased until 2008, due to productivity losses despite a smaller drop in employment.
• Wage growth remained relatively stable during the recession, which contributed to the limited response of HICP inflation excluding food and energy.
• Unit profit growth offset some of the downward pressure on wages, helping to maintain inflation stability.

7. Implications for the Current Outlook

• The 2008-09 recession demonstrated that inflation adjustments in the euro area were more quantity-driven than price-driven, due to downward nominal rigidities.
• The credibility of monetary policy helped to anchor inflation expectations and prevent deflation.
• The strong co-movement between oil prices and the global business cycle is expected to continue, due to limited supply growth and rising demand from emerging economies.

Conclusion

• The 2008-09 recession had a unique impact on inflation, particularly due to commodity price swings and structural changes in the economy.
• HICP inflation excluding food and energy showed limited responsiveness to economic slack, which may be due to labor market rigidities and anchored inflation expectations.
• The role of the CAP and global economic factors significantly influenced the behavior of food and energy prices during the recession.
• The dynamics of wage and profit growth played a key role in mitigating inflationary pressures in the euro area during the recession.

Structure of the Article

1. Introduction – Overview of the 2008-09 recession and its impact on inflation.
2. Section 2 – Comparison of inflation adjustments during the 2008-09 recession with previous recessions.
3. Section 3 – Analysis of the impact of commodity prices, particularly oil, on HICP inflation.
4. Section 4 – Examination of the limited responsiveness of HICP inflation excluding food and energy to economic slack.
5. Section 5 – Conclusion and implications for the current inflation outlook.