In particular, wage growth may be stronger than anticipated, given high rates of capacity utilisation and a tight labour market. In this context, the risk of triggering an inflationary wage-price spiral is particularly acute, especially where nominal wage indexation schemes exist. Moreover, price increases in particular in parts of the services sector that lack competition may be higher than currently expected.
Against this background, it is imperative that all parties concerned contribute to avoiding the emergence of broadly-based second-round effects. This is essential to secure that longerterm inflation expectations remain firmly anchored in line with price stability. Turning to economic activity, in the first quarter of 2008, real GDP grew strongly, by 0.8% quarter-on-quarter.