Firms in the euro area mostly set prices based on markup rules and often adjust prices based on past and expected economic conditions. About one-third of firms change prices regularly, while two-thirds consider the state of the economy. Price stickiness is mainly due to customer relationships and coordination issues. Firms react differently to cost shocks and changes in demand, with cost increases having a bigger impact on prices than cost decreases, and demand decreases more likely to lead to price changes than demand increases.