What has kept goods inflation low? The role of the import exposure to China

This box analyses the impact of prices of imports from China on euro area goods inflation. Inflation for China-exposed goods has been persistently lower than total goods inflation, with model-based estimates suggesting that shocks which bring down the prices of imports from China by 10% in exposed sectors reduce inflation by 0.1-0.7 percentage points in key categories such as furniture and appliances. A historical decomposition estimated over the period between January 2002 and April 2026 shows that, cumulatively, import price shocks from China reduced goods inflation by 0.27 percentage points by April 2026, with delayed effects from the appreciation of the euro in 2025 further dampening goods inflation.