Exchange rate shocks gaining importance for eurozone inflation – research

Core inflation less influenced by exogenous factors, Bank of Spain research paper says

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Headline inflation in the eurozone has become more dependent on external exchange rate movements since the early 2010s, according to research published by the Bank of Spain.

In Exchange rate shocks and inflation co-movement in the euro area, Danilo Leiva-Leon, Jaime Martínez-Martín and Eva Ortega aim to improve assessments of exchange rate effects on the fluctuations of prices across countries.

Their work decomposes the effect of external exchange rate shocks on inflation in individual euro

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