its distribution since 2018, points to a mixed picture, with some signs of easing pressures ( chart 15 ). the first feature that emerges from the heatmap is the transmission of the price pressures along the pricing chain, with “ red spots ” generally emerging first on the commodity front and then showing up in producer prices and further “ downstream ”. compared to the peaks during the re - opening phase of last year, the latest observations point to weaker pressures from the energy commodities, non - energy and non - food commodities, global and domestic economic activity and supply side bottlenecks. by contrast, stronger pressures are indicated by the indicators for food - related costs and labour market developments, in particular from the tight labour market and from wage growth. generally, producer price pressures are still elevated, reflecting recent increases in input costs. overall, the heatmap suggests still strong inflationary pressures, but some signs of easing are emerging. chart 15 inflation drivers heatmap red = risk of higher inflation ; blue = risk of lower inflation ; grey = no data. source : eurostat, world bank, sdw, haver analytics and ecb staff calculations. notes : the colours have been assigned based on where each indicator lies in comparison to past readings starting 2018 ( the historical distributions were split into 11 areas with equal empirical probabilities ). most of the variables are expressed in annual growth rates. the exceptions are pmis, unemployment rate, the global supply chain pressure index ( gscpi ) from the new york fed, the global economic conditions indicator, european commission indicator of limits to production ( insufficient demand ), capacity utilisation and labour shortages, where no transformation is applied. conclusions in this lecture, i have highlighted that the monitoring of underlying inflation is an essential input into the monetary policy process. i have emphasised that an accurate assessment of underlying inflation is especially tricky in view of the large dislocations that have hit the economy, since the energy crisis and the pandemic have generated inflation shocks that do not fit neatly into either the “ pure noise ” or “ medium term ” components of inflation but rather also plausibly contribute to a “ reverting ” component of inflation. differentiating the reverting and medium - term components of inflation the main analytical challenge and is inevitably subject to high uncertainty. there are no short cuts in the analysis of underlying inflation, which requires a comprehensive multivariate and multi - method assessment. in particular, the tracking of underlying inflation must

bundesbank, banco de espana, the dutch employer association awvn, banca d ’ italia, banque de france, bank of greece and oesterreichische nationalbank. note : the euro area aggregate is based on data from germany, france, italy, spain, the netherland, austria and greece. indeed wage tracker : data on nominal wage growth in job postings covers six euro area countries ( de, es, fr, ie, it and nl ) and is based on “ wage growth in euro area countries : evidence from job ads ” – p. adrjan & r. lydon, economic letter, central bank of ireland, vol 2022, no. 7. the latest observations are for december 2022. however, as shown in chart 12, there are two indicators that suggest that the negotiated wage indicator understates the current degree of nominal wage momentum. first, a broader forward - looking experimental tracker of negotiated wage growth has been developed by the ecb in cooperation with national central banks ( chart 12 ). [ 21 ] this wage tracker aggregates information from collective bargaining agreements across euro area countries and includes information on the latest wage increases that have been agreed for 2023. [ 22 ] contract negotiations during 2022 have typically delivered a 4. 4 per cent wage increase for 2022 and a 4. 8 per cent increase for 2023. additionally, the wage increases agreed for 2023 have shifted upwards towards the end of the year over 2022. this suggests that nominal negotiated wage growth based on latest agreements is set to be higher this year compared with the level that would be consistent in the medium term with the two per cent overall inflation target. a second wage growth tracker based on indeed job postings data has been developed by adrjan and lydon ( 2022 ). [ 23 ] these data reflect the pay offered to the marginal worker ( a new hire ). at the same time, it should be recognised that, in a tight labour market, hiring wages are likely to outpace the wages offered to existing workers such that the level of the wage growth tracker is not necessarily an indicator of the expected future level of aggregate growth in negotiated wages. rather, it is more likely to serve as a leading indicator of the momentum in wage dynamics. for instance, the earlier pickup in this wage tracker since summer 2021 foreshadowed the subsequent pickup in the negotiated wage growth measure and the strong increases in the wage tracker indicator during 202