This stylised overview from the European Central Bank illustrates the complex interplay between domestic and external factors driving inflation. It highlights how import prices, exchange rates, global value chains, and commodity prices interact with productivity, wages, domestic slack, and inflation expectations to influence the Harmonised Index of Consumer Prices (HICP). The graphic distinguishes between domestic drivers (red arrows), external drivers (green arrows), and exchange rate mechanisms (blue arrows), while proposing possible channels of influence from global factors.