The speed of price change varies greatly between sectors

The prices of raw materials such as oil or wheat have experienced in recent years of large-scale movements, resulting in large variations in inflation in France (-0,8 this summer against 4 in July 2008). The question of the pricing is again at the heart of the issues of economic and political actors. How prices adjust to changes in the economic environment With which are shocks transmitted to the selling prices Consider the example of the bread sold in bakery. It is not uncommon that the price of the rod remains constant for several months then the price of wheat, one of its main ingredients, is frequent and significant changes. In a competitive setting, this lack of immediate response of the costs of raw material prices should result in losses of profit for businesses. How to streamline behavior which, at first glance, is sub-optimal How justified that retail prices does not immediately adjust to changes in the market

Known as 'nominal rigidities', this temporary origin of nominal wages to their equilibrium value or price. Several explanations can be advanced to justify the price rigidity: the existence of costs related to changes in catalog or menus in the restaurants, on the information clients and vendors, the resistance of the customers to price changes or yet the presence of explicit or implicit contracts. Companies must arbitrate between the costs associated with the change in price or suffer a loss of profit. It may then be optimal for a company did not immediately respond to changes in its environment. Prices may therefore remain constant during several periods even if the company suffers shock.

Nominal rigidities constitute a central hypothesis of the néokeynésien model, became dominant in monetary macroeconomics paradigm. The existence of nominal rigidities in effect has important consequences at the macro level because they explain why monetary policy can have effects on the production in the short term. If prices and wages are not flexible instantly, the Central Bank can, by acting on the short-term nominal interest rate, change the real interest rate. Short term, at least, monetary policy has then effects on real activity.

If the existence of nominal rigidities is a critical macroeconomic issue, the extent of these rigidities requires to study in detail of the thousands of individual price records. The analysis of the decisions of agents allows to better characterize their structural behaviour and thus enrich macroeconomic diagnosis. Yet, until recently, economists ignored almost any change in the price terms because the information was not available. In recent years, databases containing millions of individual prices were analysed in detail by European economists (particularly in the central banks) and the United States. The studied prices are those identified by the national statistical institutes for retailers or businesses to build indices of prices for consumption and production.

The assumption often made before this work was that prices were on average a year. In fact, it appears that the fixity of a price average is instead of the order of six months in France as in the euro area. In the United States, the prices are a little more flexible. However, prices in Europe are not so rigid: as in the United States, the price declines are not uncommon and account for 40 of the price changes. The average magnitude of price changes is of the order of 8 to 9 for the consumer price and 4 for the price, but small scale changes are also common. The speed of price change varies greatly between sectors. Prices of energy and maintenance assets change more often than those of manufactured goods. Services prices appear to be more rigid, they can stay more than a year without change and only 20 of the changes are reductions. These differences can be explained by the most important part of the work in (downward) the greater rigidity of wages and services. Duration between two changes of salary are longer between changes in price and wage cuts are very rare. The influence of the institutions of the market of work in Europe on the wage rigidity may be one of the elements of explanation of transatlantic differences of price rigidity.