It is the Governing Council’s view that risks to these projections for economic growth are broadly balanced over the shorter term, while longer-term downside risks relate mainly to potential further oil price rises, global imbalances and protectionism. Turning to price developments, according to Eurostat’s flash estimate, annual HICP inflation increased to 2.5% in May, compared with 2.4% in April and 2.2% in March.
Although no detailed information is available as yet, this increase probably stems from energy price developments. In the months to come and in 2007, inflation rates are likely to remain above 2%, the precise levels depending on future energy price developments.