As the latest OECD Economic Outlook shows, inflation has remained persistent in the large, slower-growing economies, such as Germany and Italy. Inflation in these countries, though relatively low, has not declined sufficiently to offset higher rates of inflation in faster-growing economies, like Ireland.
This prevents the euro area-wide rate from falling. The OECD study points to various rigidities, which structural reforms to raise productivity growth would help to address.
©OECD Observer No 235, December 2002