On page 90 of the recent ECB monthly is a box which takes a brief look at the globalization – inflation link. It shows that the share of imports from low-cost countries has risen fat in the past decade, from 40 to 50 percent, and that in Q4’2006 this process accelerated. Import prices from low-cost destinations stopped falling, but it is attributed by ECB mostly to rising energy prices. Conclusion, globalization continues to put downward pressure on eurozone prices.
- Chart 1 Share of eurozone imports coming from low cost destinations
- Chart 2 Price of imports from low cost destinations