Since July this year – when HICP inflation was at 4% – inflation most recently has substantially declined, reading 2.1% in November. In this process of disinflation we might even see negative inflation rates for a couple of months in some regions of the euro area.
Over the policy-relevant horizon, inflation rates are expected to be in line with price stability, supporting the purchasing power of incomes and savings. The Eurosystem staff projections foresee annual HICP inflation rates of between 3.2% and 3.4% for 2008 and declining rates of between 1.1% and 1.7% for 2009.