Indeed, the increase in oil prices over the past few weeks – besides being influenced by temporary supply constraints – reflects the risk of more acute tensions in oil markets in the future, which, in turn, would have a negative impact on the prospects for economic activity worldwide.
There are still, therefore, downside risks to the outlook for economic activity in the euro area, although the current low level of interest rates should help to counterbalance these. Turning to price developments, according to Eurostat's flash estimate, annual HICP inflation was 2.2% in December 2002, unchanged from November 2002.