Euro Area Membership Effects on Inflation
Euro Area Membership Effects on Inflation

Author(s): Avi Tahchieva
Subject(s): Politics / Political Sciences, Politics, Economy, Business Economy / Management, Economic policy, EU-Accession / EU-DEvelopment, Socio-Economic Research
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: Euro area; European Union; inflation; crisis; impact; economic stability
Summary/Abstract: The inflation rates and their convergence within the Euro area were a major concern even before the advent of the single currency. The study attempts to examine the main factors of inflation and differentials in members of the Euro area for the period 2007–2022. The search for the causes of the current high inflation starts with the consequences of the Covid-19 pandemic. The global economy recovered fast once the pandemic ended and the restrictions on consumption and travel were lifted. Then conflict between Russia and Ukraine caused energy and commodity prices, including food prices, to increase. The differences between the inflation rates in the various countries of the Euro area first started to widen in 2020 when the pandemic caused stronger disinflation in countries that have large tourism sectors. As the pandemic faded, inflation picked up most in countries where the economy had declined less and where labor shortages were starting to put pressure on wages.

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