At the same time, the persistence of uncertainties related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets poses downside risks to the euro area growth outlook. Headline inflation in the euro area has lately been hovering around 1.5%, somewhat lower than in the summer of last year, when it was around 2.0%.
This largely reflects the volatility in the annual rate of change in energy prices. Measures of underlying inflation remain generally muted, but labour cost pressures have strengthened and broadened amid high levels of capacity utilisation and tightening labour markets.