ep BANCA D'ITALIA

EUROSISTEMA
WY)

Money, credit and disinflation

Speech by Luigi Federico Signorini
Senior Deputy Governor, Bank of Italy

Vienna University of Economics and Business

Vienna, 24 January 2024

Let me first thank! the Wirtschaftsuniversitat Wien, and Professor Aurel Schubert
personally, for their kind invitation.

After a long period of low inflation and very accommodative monetary policy,
the past few years have seen a sharp increase in price dynamics, followed by a
commensurate monetary policy response and then a rapid decline in inflation. This
talk will informally discuss some evidence concerning the mechanisms at work, with
a focus on monetary aggregates and credit during the inflation and disinflation
stages, also in the light of some renewed academic and policy interest in this
specific issue.

Major changes in the economic environment often spark intense debate, sometimes
reviving ideas that were held to be important for a time, but then fell out of favour. One
example of this is the quantitative theory of money, popularised by Milton Friedman
more than 60 years ago. During a talk in India in the same year that Friedman's and
Anna Schwartz's seminal Monetary History of the United States was published, he
famously stated: 'Inflation is always and everywhere a monetary phenomenon in the
sense that it is and can be produced only by a more rapid increase in the quantity of
money than in output'.

Nowadays few would subscribe to a literal, causal interpretation of Friedman's statement.
Too many conceptual and technical issues about causation, and too many 'long and
variable lags', as Friedman himself would say. Purely quantity-based monetary policies
no longer appear reasonable to many economists. Still, I find it rather remarkable that,
after the Volcker and the Bundesbank disinflations of the late 1970s (which, intellectually
speaking, owed much to quantity theory), the pendulum eventually swung all the way to

I wish to thank G Ferrero and F. Corsello for assistance in preparing this speech. The opinions expressed are my own.
Friedman, M. (1963), 'Inflation Causes and Consequences', Asian Publishing House.

the opposite side, and the idea of any relationship between money and prices that was
relevant for monetary policy was gradually forgotten. After all, inflation by definition
only exists in relation to money, and PY=MV is an identity; while V is everything but
'extremely stable', as Friedman would have it, it seems difficult to believe that there is
no technological and/or behavioural internal logic to it that will reassert itself sooner
or later.

In recent years, in fact, interest in the analysis of monetary aggregates and of the
relationship between money growth and inflation has started to grow again.' In the
autumn of 2022, in a speech prepared for the presentation of an Italian translation of
Friedman and Schwartz's book, I discussed this renewed academic and policy attention.
During today's speech, I shall address some of the points mentioned on that occasion
and expand upon them to include a few more recent developments. I shall first present
evidence on monetary and inflation developments in the euro area in recent years. Then,
I shall touch on the current debate on money and inflation, and offer some qualitative
views on the issue and the possible policy implications.

Figure 1 shows the evolution over time of central bank reserves, currency in circulation,
M1, and M3-M11 in the euro area. Figure 1.a plots the ratio of the monetary aggregates to
nominal GDP, while Figure 1.b plots the annual growth rate of the monetary aggregates.
Some remarkable developments are apparent.

Between 2015 and 2022, the ratio of reserves to GDP increased by a factor of 20, peaking
at 1.5 in 2022Q1; since then, it has declined by one third, to 1.0 in 2023Q3. Before the
COVID-19 pandemic, M1 also grew significantly, though at a less spectacular pace. It
accelerated in the early months of the pandemic: between January and June 2020, the
M1/GDP ratio rose from 2.9 to 3.7, that is, by roughly as much as it had over the previous
five years. Since the start of 2022 the ratio has fallen, returning to pre-pandemic levels
in 2023Q3. M3 rose by much less over the same period; the ratio of M3-M1 to GDP
therefore declined between 2009 and mid-2022, from 2.3 to 1.3; since then, it has been
increasing again.°

With all this, there was no surge in inflation before 2021; if anything, the opposite
happened. Annual headline HICP inflation and the core component had averaged 2.2

n the United States, the instability of money demand prompted a change from monetary aggregates to short-term
interbank interest rates as an operational target. The ECB/Eurosystem adopted monetary aggregates as a 'first
pillar' at inception, but - again, based on evidence - has since shifted to other indicators. As the ultimate compass
or monetary policy, inflation targeting, pioneered by New Zealand in the late 1980s, has been adopted by many
central banks.

See for example, Acharya, V. and Rajan, R. (2022), 'Liquidity, liquidity everywhere, not a drop to use - Why flooding
banks with central bank reserves may not expand liquidity', NBER Working Paper Series, No 29680, National Bureau
of Economic Research; Acharya, V., Chauhan, R., Rajan, R. and Steffen, S. (2023); 'Liquidity dependence and the
waxing and waning of central bank balance sheets', NBER Working Paper Series, No 31050, National Bureau of
Economic Research; Vissing-Jorgensen, A. (2023), 'Balance sheet policy above the effective lower bound', paper
presented at the ECB Forum on Central Banking, Sintra, June; Lopez-Salido, D. and Vissing-Jorgensen, A. (2023),
'Reserve Demand, Interest Rate Control, and Quantitative Tightening', Working Paper, Federal Reserve Board;
andAltavilla, C., Rostagno, M. and Schumacher, J. (2023), 'Anchoring QT: liquidity, credit and monetary policy
implementation', CEPR Working Paper.

he correlation between M1 and the other less liquid components of M3, which was close to zero between 2015 and
2020, became -0.97 after the Covid pandemic.


and 1.6 per cent, respectively, between 2001 and 2007 (Figure 2). They then fell to 1.7 and
1.3 per cent in 2008-2014; both indices declined further, to 0.9 per cent in 2015-2020.

In 2021 the situation suddenly changed. Headline inflation accelerated dramatically
during the year and kept growing in the following year, until peaking at double digits in
the last quarter of 2022. It then started to fall, also rapidly, to an annual average of 5.4 per
cent in 2023. Core inflation peaked a bit later than headline inflation, reflecting delayed
pass-through of the shock to business costs and final prices.

How has the relationship between money and inflation changed in recent years? What
role have the peculiar shocks that have hit the economy in the 2020s played? And how
have they interacted with the ECB's monetary policy?

The central bank had impressed a deliberate, powerful monetary impulse on the economy
after the GFC and, especially, after the sovereign debt shock. This action was motivated
by the fear of financial meltdown and of a breakdown of the euro ('Whatever it takes').
After 2014, however, the main concern had begun to be the risk of deflation, given that
price increases had moved downward and remained persistently below target. As policy
rates approached their effective lower bound, the ECB, like many of its peers, resorted to
QE, establishing its asset purchasing programme (APP) in 2015.

The APP entailed the purchase of low-risk long-term assets. This was meant to create a
shortage of such assets in the market, which would increase their price or, equivalently,
reduce their yield. Through portfolio rebalancing, the reduction would propagate to
other assets, reducing the cost of financing for households and firms, and stimulating
aggregate demand.

Over the several years in which quantitative programmes were in place, the central
bank balance sheet expanded. As we have just seen, monetary aggregates increased
significantly. Both inside and outside money were affected: the former thorough the
accumulation of reserves, the latter through the expansion of credit by the financial
system that the former made possible.

To the extent that the securities that the central bank purchases under QE come from the
portfolios of households or (non-bank) firms, the increase in reserves is accompanied by
an increase in bank deposits. In line with quantity theory, this increase is independent of
the private sector's demand for money.

The increase in the holding of liquid assets by the private sector was favoured by the very
low opportunity costs of money. In a low interest rate environment, agents are effectively
indifferent between holding the overnight deposits obtained in exchange for the safe
assets sold to the central bank, and holding long-term safe assets, since the returns are
similar (Figure 3).

Inflation proved stubbornly low for several years. Even before inflationary pressures
materialised, however, a debate had started on the risks of monetary policy being too

accommodative for too long. Some suggested that too many years of easy financing
conditions could encourage the financing of inefficient investments and thus result in a
sub-optimal allocation of financial resources and a persistently lower potential output.®
Others, referring to the financial instability hypothesis developed by Minsky in 1992,'
argued that the prolonged period of low interest rates induced financial firms to take on
excessive risk in search of higher returns.

Then, in 2020, the pandemic hit. Faced with the urgent need to provide additional monetary
accommodation as a response to the financial stability and real economy concerns that
had dramatically reappeared, and with policy rates already at the lower bound, the ECB
added the Pandemic Emergency Purchase Programme (PEPP) to its existing quantitative
toolkit. As we have seen, this further increased the amount of reserves and bank overnight
deposits, and further reduced long-term interest rates.

In 2021-2022, with the pandemic emergency largely behind us but the PEPP still very
much in place, inflation was reignited after many years. Specifically, in 2021, as the
world economy recovered from the COVID lockdowns faster than many had expected,
worldwide bottlenecks emerged: increased delivery times, higher shipping costs and
rising raw material prices created strong upstream pressures on prices. Most importantly
for the euro area (given its energy dependency), the post-pandemic recovery started to
cause imbalances between supply and demand in the oil and gas markets as early as
mid-2021. Russia's aggression against Ukraine (early 2022) then caused oil and gas costs
to escalate further, leading to a shock in energy prices the like of which the world had
not seen for half a century.

The supply shocks triggering this inflationary wave in the euro area were exogenous
(Figure 4). They did occur at a time when liquidity was very abundant and interest rates
very low. However, as long as pipeline pressures to inflation were muted, i.e. until 2020,
inflation had been contained and below target despite the ultra-expansionary monetary
policy. Where's the link?

As I mentioned at the outset, interest in the relationship between monetary aggregates
and inflation trends has been rekindled in the light of what we have observed in the most
recent period. Let me briefly mention just a few contributions.

In a recent speech,® Isabel Schnabel discusses the potential role of money in explaining
the recent inflation developments in the euro area. She invokes the quantity theory of

See for example, Engen, E., T. Laubach and D. L. Reifschneider, (2015) 'The Macroeconomic Effects of the Federal
Reserve's Unconventional Monetary Policies,' Finance and Economics Discussion Series 2015-5, Board of Governors
of the Federal Reserve System, and Hall, R.E. (2017), 'High Discounts and High Unemployment', American Economic
Review, vol. 107, No. 2.

See for example, Rogoff, K. (2016) 'Debt supercycle, not secular stagnation'. In O. Blanchard, R. G. Rajan, K. Rogoff
and L. H. Summers (eds), Progress and Confusion: The State of Macroeconomic Policy Cambridge, MA: MIT Press:
pp. 19-28, and Borio, C. Juselius, M., Disyatat P. and Drehmann, M. (2017) 'Monetary policy, the financial cycle and
ultra-low interest rates', International Journal of Central Banking, vol. 13(3), pages 55-89, September.

Isabel Schnabel,'Moneyandinflation'. Thunen Lecture atthe annualconferenceofthe Verein fiirSocialpolitik, Regensburg,
25 September 2023, https://www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230925_1~7ad8ef22e2.en.html

money as one possible lens through which to view the recent economic juncture. She
argues that the impact of quantitative programmes on the interplay between money
growth and inflation crucially depends on the state of the economy. She also suggests
that recent money growth may have been 'the grease that kept the wheels of inflation
going'. The state dependence of the velocity of money circulation is in fact likely to be an
important factor in explaining the relationship between money and inflation. I shall go
back to this point in my conclusion.

Claudio Borio and colleagues from the BIS? also suggest that the link between money
and inflation may be state-dependent, though in a slightly different sense. They focus
on high or low inflation regimes and find that the relationship between inflation and
monetary aggregates is observable in high-inflation regimes, but not in low-inflation
regimes. They do not draw any causal conclusions, but provide correlations using data
from advanced and emerging economies.

Other authors have focused on the liquidity created by central banks and their inflationary
role through the profitability channel or the easing of liquidity constraints for banks. In
the first case, the abundance of reserves created by QE would have increased banks'
profitability in a period of rising interest rates on excess liquidity."° In the second case the
abundance of reserves would allow banks to increase their credit lines to firms, reducing
the risk that the latter would face liquidity constraints."

The sudden change in the inflation landscape prompted a massive shift in the monetary
policy stance. Since 2022, ECB policy rates have been raised by a cumulative 450 basis
points. The size of the ECB/ESCB balance sheet has fallen in size by more than 20 per
cent, from 3.5 to 2.5 times the size of the area's GDP, and is planned to fall further.

At the same time, inflation has gone down considerably from its peak of more than 10
per cent in October 2022. In December, the most recent observation available, headline
inflation was below 3 per cent. Core inflation also fell significantly in the second half of
2023, from more than 5 per cent in the first half of the year to 3.4 in December.

The disinflation process, however, has coincided not only with resolute monetary
tightening, but also with a reversal of exogenous cost increases. The large supply shock
that hit the global economy in 2021 had already started to fade by the second half of
2022, with an easing of supply bottlenecks and the start of a decline in energy prices.
This process continued in 2023. One can therefore reasonably ask, to what extent is the
disinflation we have seen the result of the former and how much of the latter."* Was it
wisdom or was it luck?

Borio, C, Hofmann. B., and Zakrajsek, E. (2023), 'Does money growth help explain the recent inflation surge?', BIS
Bulletin No 67 and https://www.bis.org/publ/bisbull67.pdf

See for example, Altavilla, C., Rostagno, M. and Schumacher, J. (2023), 'Anchoring QT: liquidity, credit and monetary
policy implementation', CEPR Working Paper.

Acharya, V., Chauhan, R., Rajan, R. and Steffen, S. (2023); 'Liquidity dependence and the waxing and waning of central
bank balance sheets', NBER Working Paper Series, No 31050, National Bureau of Economic Research.

ECB Vice-president De Guindos also attributed the disinflation to the joint effect of easing cost pressures and the
transmission of monetary policy tightening. See 'The economic outlook and monetary policy in the euro area', Speech
by Luis de Guindos at the 14th edition of Spain Investors Day, Madrid, January 2024.

Let me put this question in what I think is the right context. In advanced economies, the
cost of disinflation in terms of real cycle, while surely observable especially in Europe,
has so far been considerably lower than many had expected on the basis of historical
experience. Contrary to what typically happens in times of monetary tightening, so far
we have not seen a sharp contraction in economic activity and output. Employment has
actually even improved. All this while money and credit were going down very fast. In
Italy, credit developments were comparable to the credit crunch we experienced in 2011-
12, with completely different real effects.

There are, therefore, two outcomes to explain (disinflation and relative real resilience),
not just one.

Empirical research will shed light on the issue, to the extent that it can tackle
counterfactuals. My personal view at this stage is the following. Without an easing in
cost pressures, monetary policy would only have been able to engineer disinflation at
a slower pace and, quite possibly, at a higher real cost. On the other hand, especially
given super-abundant liquidity, without monetary tightening the initial, strong push
of input costs, which was transmitted to final prices at a fast pace and for an extended
period in 2021-22, could easily have started a spiral that it would then have been
difficult to stop. Confidence in the determination of monetary authorities not to let
that happen, thanks to a drastic change of stance that was clearly communicated and
(crucially) immediately followed by facts on the ground, has been, in my view, a key
factor in avoiding an entrenchment of inflation.

The effects of monetary tightening on the economic cycle have naturally been cushioned
by the ample liquidity that existed at the start. Fiscal policy, still expansionary even though
Covid-time emergency measures are being gradually withdrawn in many countries, has
also played a key role. In many countries, however, fiscal consolidation is a necessary
goal.

All factors counted. A change in monetary policy was necessary to forestall an
entrenchment of inflation; the reversal (so far) of the supply shock considerably eased
the pressure; fiscal policy was still sustaining the cycle in this phase.

You may have noticed that I have repeatedly used the words 'so far'. Indeed, uncertainties
abound. Worldwide tensions, whose effects on input prices have been relatively muted
for the past year or so, may intensify in areas of strategic significance; nobody can quite
rule out new input-price shocks. On the other hand, if you look at monetary conditions,
even if the current interest rates are not anomalous by historical standards, the increase in
policy rates was unprecedented in the euro's 25-year history, while monetary and credit
aggregates have come down precipitously. Let me emphasise that given the inherent,
uncertain lags, we cannot know for sure to what extent monetary developments have
already worked out their effects.

All this calls for a data-dependent, open-minded approach to determining the appropriate
level and duration of the monetary tightening. On this, however, let me stop here: this
is not the right place, nor am I the right person, to make specific comments on the

prospects for monetary policy. I can only refer you to the ECB's and the Bank of Italy's
official statements on the matter.

These considerations, however, bring me back to the initial focus of this talk. If we look
at the effects of monetary policy, specifically in the current disinflation phase, what
respective roles have been played by the sharp rise in interest rates and by the contraction
in liquidity? Or, to ask a connected question that is more general, though perhaps slightly
less deep and difficult: do money and credit aggregates provide useful informational
inputs for monetary policymaking?

It will not be possible here to give a precise, theoretically and empirically well founded
answer. This is a task for future research. Let me just make, in the last part of this talk, a
few qualitative observations that, I hope, will sound reasonable.

Inflation may not be 'always and everywhere a monetary phenomenon', but (as I have
argued elsewhere) it is a money-enabled phenomenon. Sceptical as we may be about
the stability of V, there are limits: price increases cannot last too long without enough
monetary fuel. The mechanism is not likely to be as clear-cut as Friedman claimed, the
direction of causation even less so; but it seems impossible to think that there are no
long-run connections, especially when changes in the quantity of money are - at least
partly - the direct, 'exogenous' effect of monetary policy, rather than the passive reflection
of money demand from private agents.

So, how come an extraordinary policy-induced increase in the quantity of money has
coexisted with very low inflation for a protracted period of time? And is there a link with
what happened thereafter, with the rapid rise in inflation and its subsequent fall? Let me
use a metaphor to hint at a possible answer.

Money is like hay in a barn. You can amass as much hay as you wish, and it will seldom
catch fire by itself,'? especially if the weather (for instance, weak demand, or the recurrent
cost savings resulting from increasing globalisation) is not especially conducive to
ignition. However, if weather conditions change ('slowbalisation' sets in, for instance) and
a burning match, such as an input-cost shock, is thrown into the hay-filled barn, it may
well catch fire; after which, the more hay there is, the more difficult it will be to put out
the fire. Heaven forbid that other lit matches get thrown into the barn in the meantime.
You have no way to predict the timing, but you know the risk is there.

The evolution of monetary aggregates is thus likely to supply policy-relevant information,
although, in line with the metaphor above, the inherent instability of econometric results
makes this kind of data unsuitable for a mechanical reaction function. The composition
of the balance sheets of central banks and commercial banks does provide valuable
insight into how interest rates and monetary policy affect the decisions of firms and
households, provided it is interpreted with reference to the current environment and

3 Though, apparently, this does sometimes happen: see or example https://www.feedcentral.com.au/why-do-hay-

bales-catch-fire/.

in a forward-looking manner. Central banks with a medium-term inflation target assess
all the factors that pose risks to inflation. Money developments, taken cum grano salis,
certainly belong in the relevant data set.

With a pinch of salt, I said: money should not be a fetish. In my view, it was absolutely
right to respond to the COVID crisis, which might have suddenly starved the economic
and financial system, by urgently providing as much hay as was conceivably needed to
keep the livestock alive under all circumstances. That was an unprecedented reaction to
unprecedented events; as such, it was appropriate even if this reaction could entail some
potential fire hazard when conditions would change - as the money charts showed.

When the risk threatened to materialise, central banks, no less appropriately, changed
course. Given that wage growth (among other things) reacts to inflation with a certain
degree of inertia, due to the lagged and staggered nature of wage bargaining, the high
inflation rates of recent years could in principle give rise to delayed second-round effects;
this would be of particular concern if further supply shocks were to materialise.

Today, money and credit charts point very obviously downwards. As I have already pointed
out, lags will also have to be factored in. So far, medium-term inflation expectations in
the euro area have remained anchored at levels that are close to the target. As long as
no further burning matches appear, central banks must therefore also remain alert to the
risk of overkill. Increased interest rates may interact with the rapidly declining amount of
reserves and liquidity that QT entails.

Money charts will never be a sure guide to action, but I think they do provide valuable
information. In a world of pure fiat money, central banks are all we have to protect the
stability of its value. This places a heavy, sometimes daunting, burden on their shoulders.
Assessing the right course, amid complex signals, requires balanced judgment. It also
requires making use of all relevant bodies of data.

Appendix

Figures and Tables


Figure 1: Inside and Outside Money

a) Inside and outside money over GDP (at current prices)

(quarterly data)

2 4
1.75 3.5
1:5 3
1.25 2.5
1 2
TA) 125)
5 1
25 5
0 0

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

- Reserves/GDP - Cash/GDP - M1/GDP (rh.s.) -- M3-M1/GDP (r.h.s.)

b) Inside and outside money annual growth rates
(per cent; monthly data)

3005

1505

-150-_ r-15

T T T T T T T T T T
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

- Reserves - Cash(r.hs.) - M1(rh.s.)  -- M3-M1 (r.h.s.)

11


Figure 2: HICP headline and core inflation

(monthly data; annual growth rates)

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

- HICP headline -- HICP core

Figure 3: Outside money and HICP in the euro area

(monthly data; annual growth rates)

105-5 105
90 9
2 75
60 6
45 45
30 3
15 15
0 0
-15 -1.5
-30 -3

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

- Monetary base - HICPheadline(r.h.s.) = -- HICP core (r.h.s.)

12

Figure 4: Inside money and HICP in the euro areay

(monthly data; annual growth rates)

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
- M1 - M3-M1 - HICP headline(r.h.s.) I -- HICP core (r.h.s.)

Figure 5: Inside money and interest rates

(monthly data; annual growth rates; per cent)

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

- M1 -M3Mi = - Short-term rate (rh.s.) = Long-term rate (rh.s.)

13

Figure 6: Inside and outside money velocity

(annual data)

20+

=s

-k

So

i
Sup wh ODN ww

-T T T T T T T T T T

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

- Reserves - Cash - Mi(rhs.) - M3-M1 (rhs)

Figure 7: Euro area inflation and supply shocks

(monthly data; annual growth rates)

2015 2016 2017 2018 2019 2020 2021 2022 2023

- HICP headline -- HICP core - PPI energy (r.h.s.) - Imported intermediate (r.h.s.)

14

Figure 8: Comovements of inside and outside money
with HICP headline inflation in 2002-2023

Cross correlation between X (t) and HICP headline inflation (t+h)
Cash (t) Reserves (t) Monetary base (t)

Cross-corelogram 'Cross-correlogram

Pill lace

uuu 0 Hu

15

Figure 9: Comovements of inside and outside money
with headline HICP inflation in the two subsamples
2002-2014 and 2015-2023

Monetary base (t) and HICP headline inflation (t+h)
Jan 2002 - Dec 2014 Jan 2015 - Oct 2023

Cross-correlogram Cross-correlogram
i i

0.50.

0.00 co Tt

S
Q
8
Cross-correlations of base and hicp

Cross-correlations of base and hicp

M1 (t) and HICP headline inflation (t+h)
Jan 2002 - Dec 2014 Jan 2015 - Oct 2023

Cross-correlogram Cross-correlogram
i i

©
8

0.004

tl I

Cross-correlations of m1 and hiep
Cross-correlations of m1 and hiep

M3-M1 (t) and HICP headline inflation (t+h)
Jan 2002 - Dec 2014 Jan 2015 - Oct 2023

Cross-correlogram Cross- -correlogram
i

oli, soot] mill fh es

Cross-correlations of m3_m1 and hicp
°
a
$

Cross-correlations of m3_m1 and hicp


Table 1 - Descriptive statistics on currency in circulation

and reserves

(annual growth rates; monthly data; per cent)

Reserves
Cash
Base money

Reserves
Cash
Base money

Reserves
Cash

Base money

Reserves
Cash
Base money

Reserves
Cash
Base money

[obs [wean [sd bev] Min [Max]

Jan 2002 - Oct 2023

17

Table 2a - Descriptive statistics on M1, M2 and M3

(annual growth rates; monthly data; per cent)

a ST

Jan 2002 - Oct 2023

Jan 2002 - Dec 2007
9.9 3.4 3.9
8.0 1.8 4.7
6.6 4.7 0.9

Jan 2008 - Dec 2014

Table 2b - Correlations between monetary aggregates
and interest rates

M1 M3-M1

Period Short- Long- Short- Long- M1
term rate I termrate I termrate I term rate
2002 - 2023 -0.33** -0.30** 0.78** 0.38** -0.52**
2002 - 2007 -0.61** -0.66** 0.91** 0.38** -0.70**
2007 - 2014 -0.45** -0.40** 0.88** 0.43** -0.62**
2015 - 2020 0.40** -0.13 -0.71** -0.84** 0.04
2021 - 2023 -1.00** -0.85** 1.00** 0.87** -0.96**

18

Table 3 - Descriptive statistics on HICP headline and core

(annual growth rates; monthly data; per cent)

[obs wean [sd bev] Min [Max]

Jan 2002 - Oct 2023

HICP headline 262 2.1 1.9 -0.6 10.6
HICP core 262 1.6 1.0 0.2 5.7

Jan 2002 - Dec 2007

HICP headline 72 2.2 0.3 1.6 3.1
HICP core 72 1.9 0.4 1.3 2.6

Jan 2008 - Dec 2014

HICP headline 83 1.7 11 -0.6 4.1
HICP core 83 14 0.5 0.7 2.6

Jan 2015 - Dec 2020

HICP headline 72 0.9 0.7 -0.4 2.3
HICP core 72 1.0 0.2 0.4 1.4

Jan 2021 - Oct 2023

HICP headline 33 5.8 2.9 0.8 10.7
HICP core 33 4.2 2.3 0.8 75

19