Historically, stronger dynamics in services prices than in non-energy industrial goods (NEIG) prices have led to a persistent positive gap between services and NEIG inflation rates. However, the relative price of goods versus services rose rapidly in 2021-2022 before subsequently falling back. This box reviews this episode and examines whether the pre-pandemic trend in this relative price development provides a good benchmark for future developments, also taking into account the potential impact of structural factors related to deglobalisation, digitalisation, demographic trends and climate change.
Nothing contributes so much to the prosperity and happiness of a country as high profits