Statistical factors . Most consumer or producer price indices are based on years during which, because of low energy prices, heating and transportation costs were relatively low. This reduces the measured impact of changes in energy prices on the cost of living. In addition, thanks to a long phase of low inflation, wage indexation to the cost of living has been shed in most countries, breaking the vicious circle that led to protracted high inflation in the 1970s and early 1980s. Sings of improvement are emerging, however.
Wage indexation is either no longer automatic or based on semi-annual adjustments.
This suggests that the effect of higher oil prices on wages and consumer prices will be smaller and less persistent than in the past. Worsening in oil trade balances looks manageable . The adverse effect of higher oil prices on trade and current account balances in non-oil producing countries has been more significant. This accounts for almost one-third of the widening in the overall trade deficit. However, the rise in oil prices has coincided with a strong recovery in the European economy that has boosted exports from central Europe and, to a lesser extent, Turkey.