This box looks at errors in Eurosystem and ECB staff inflation projections over the post-pandemic period, updating and extending earlier analysis published in 2022 and 2023. Projection errors have come down considerably since the end of 2022 and now stand close to pre-pandemic levels. The low predictability of energy commodity prices (which surprised markets on the downside in 2023) explains a significant share of the recent errors in HICP inflation projections. The remaining errors are likely to stem from non-standard transmission of the exceptional shocks to commodity prices and global supply chains – which, together with demand shocks, explain a large share of the post-pandemic dynamics of HICP inflation excluding food and energy (HICPX), including in 2023. Eurosystem and ECB staff continue to refine their forecasting toolkits, providing additional analysis that informs projections in times of high uncertainty.
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