This paper examines the dynamics of inflation in the Euro area over the period 1970-1998, using a New Phillips Curve (NPC) model. The authors estimate a structural equation for inflation that is consistent with the NPC literature, which posits that inflation is positively related to real sector economic activity in the short run. They find that the NPC model fits Euro area data well, suggesting that the degree of price stickiness implied by the estimates is substantial but in line with survey evidence and U.S. estimates. The study also reveals that inflation dynamics in the Euro area appear to have a stronger forward-looking component compared to the U.S., indicating less inertia. Additionally, labor market frictions, particularly wage rigidity, are identified as key factors shaping marginal cost behavior and, consequently, inflation in Europe. The findings suggest that understanding the factors underlying the inertia in real marginal cost is crucial for comprehending inflation dynamics.This paper examines the dynamics of inflation in the Euro area over the period 1970-1998, using a New Phillips Curve (NPC) model. The authors estimate a structural equation for inflation that is consistent with the NPC literature, which posits that inflation is positively related to real sector economic activity in the short run. They find that the NPC model fits Euro area data well, suggesting that the degree of price stickiness implied by the estimates is substantial but in line with survey evidence and U.S. estimates. The study also reveals that inflation dynamics in the Euro area appear to have a stronger forward-looking component compared to the U.S., indicating less inertia. Additionally, labor market frictions, particularly wage rigidity, are identified as key factors shaping marginal cost behavior and, consequently, inflation in Europe. The findings suggest that understanding the factors underlying the inertia in real marginal cost is crucial for comprehending inflation dynamics.