Is the low level of inflation in the euro zone explained by the sluggish demand in the euro zone?

The euro zone has a considerable external surplus: we can therefore defend the theory according to which the low level of inflation in the euro zone is explained by sluggish demand. If this theory is correct, one should maintain a very expansionary monetary policy and switch to a more expansionary fiscal policy (by financing additional useful public spending in education, energy transition, new technologies, etc.). But is it certain that sluggish demand is the source of the low level of inflation in the euro zone? It is important to understand that the unemployment rate has fallen markedly, that companies' hiring difficulties are significant, that the capacity utilisation rate is high and that, as a result, wages and labour costs have accelerated markedly. The reason why inflation has remained low is that euro-zone companies are no longer able to pass cost increases on to their prices. If prices moved in line with unit labour costs, euro-zone inflation would be 2%. So it is euro-zone companies’ lack of pricing power (capacity to increase their prices), and not sluggish demand, that explains the low level of inflation .