Owing mainly to such effects, deriving from the marked decline in energy prices a year ago and the recent substantial increase in oil prices, the inflation rate is expected to remain significantly above 2% in the near future, including the first months of 2008, before moderating again.
In 2008, largely as a consequence of capacity constraints and relatively tight labour markets, inflation is expected to remain around 2% on average. As regards economic activity, it appears that the sustained real economic growth experienced in the euro area in the first half of 2007 has continued over the summer. The economic fundamentals support a favourable medium-term outlook for economic activity.