The impact of a rise in oil prices differs significantly across countries, and depends upon factors such as the oil (and gas) intensity of output, the speed of reaction of the wage-price system, the role of expectations2, the response of the monetary authorities, the export exposure to oil producing markets and the speed at which oil revenues are recycled back into the global trading system. In terms of inflation, the negative effects of higher oil prices tend to be felt less acutely in the Euro Area than the US as the Euro Area is.
