What contributes to consumer price inflation? : a novel decomposition framework with an application to Austria

This paper introduces a novel approach to decomposing consumer price inflation. Expanding upon the established decomposition method for the value-added deflator, our methodology combines the cost structure of the consumption expenditures from the input-output table with quarterly national accounts data. This enables a detailed breakdown of HICP inflation, including imports. Applying this method to Austria from Q1 2019 to Q1 2023, we identify energy and non-energy imports as major contributors to inflation in 2022. Profits began contributing to inflation from H2 2022, while wage pressures remained minimal. The results of the analysis show that the decomposition can provide valuable insights for the conduct of monetary policy.