Price levels in Europe are moving towards a common level, which could lead to higher inflation in countries with initially lower prices. This could explain differences in inflation rates across European countries. Data shows that prices in the euro area have become less varied, especially for traded goods. Despite this convergence, price differences still exist. A lower price level in 1999 is linked to a higher inflation rate in 2000. Price level convergence plays a significant role in explaining inflation differences between countries, but other factors also contribute.