We propose a core inflation index for the euro area which exploits information from a large panel of series on price, production, labour market, financial and monetary variables. The index results from smoothing operation at both the cross-sectional and time series level. By extracting the common component of inflation we clean it from measurement error, discrepancies in data recording and dynamics originated by national or sectoral idiosyncratic shocks (cross-sectional smoothing). By extracting the component with periodicity longer than one year we clean from high frequency variation and seasonal components irrelevant for monetary policy (time series smoothing). The indicator is shown to have desirable characteristics and to perform well as a forecaster of the euro area harmonized inflation at one and two years horizon (the relevant horizon for the ECB monetary policy)