Linking consumer prices and rates of employment: the shifting “Phillips curve” in UNECE countries

The “Phillips curve” is an economic model which suggests that decreasing unemployment in an economy corresponds to higher rates of wage rises.

The above graph shows the so-called Phillips curve for selected UNECE member States between 2016 and 2017. The curve displays the annual change in consumer prices (CPI) against the rate of unemployment. Each dot represents one country, the lighter dots being from 2016 and the darker ones from 2017.

In the period shown, the 14 selected UNECE countries have all experienced a reduction in the unemployment rate. In the same period, most of the selected countries, especially those which are also members of the European Union (EU), have experienced significant growth in the consumer price inflation rate.

Interestingly, mainly southern and eastern EU member countries experienced negative inflation rates in 2016. Of all UNECE countries, only countries outside of the EU and the Baltic EU member countries experienced an inflation rate of 3% or above in either 2016 or 2017.