Vincent Vеga
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- THE ECB BLOG
Inflation Diagnostics
Turning more generally to the supply and demand effects of the pandemic, the pandemic cycle has shaped inflation dynamics through several channels. Chart 16 shows the Oxford Stringency Index (OSI) since the start of the pandemic for the euro area. Chart 16 also includes the projected values of the OSI in the baseline, mild and severe scenarios in the initial ECB staff projections at the start of the pandemic.[14] Compared to these initial expectations, the pandemic ultimately generated a much longer high-stringency phase that lasted until early 2022, due to the repeated waves of high-infection periods and the limited contribution of vaccinations to reducing the infection rate.[15]
[15]
The baseline ECB staff projections in May 2020 assumed a vaccine would be rolled out in mid-2021 but that the vaccine would lead to much lower stringency conditions than proved to be the case.
