Central banks might have to accommodate core inflationary shocks to prevent households suffering greater energy price exposure, a working paper published by the Bank of Italy says.

In Energy price shocks, unemployment, and monetary policy, Nicolò Gnocato uses data from the European Central Bank’s consumer expectations survey for the eurozone, and examines the effect of energy price rises on different types of worker.

Gnocato analyses this evidence using a Heterogeneous-Agent New Keynesian, or Hank