The other is to undertake labor-saving investment and streamline production and sales processes in response to labor shortages, and thereby provide a larger amount of products and services with the same number of employees. This allows firms to secure profits without passing on increases in wage costs to sales prices.
Moreover, upside risks to price stability over the medium term have intensified further over the past few months, in a context of very vigorous money and credit growth. Looking ahead, the Governing Council expects inflation in the euro area to remain high for some time to come, before moderating only gradually in 2009.