Looking further ahead, however, the information available so far indicates that HICP inflation would fall below 2% in the course of 2005 if no further adverse shocks occurred and it does not suggest that stronger underlying inflationary pressures are building up in the euro area.
Wage increases have remained contained over recent quarters and, in the context of ongoing moderate growth and weak labour markets, this trend should continue in the future. Producer prices are rising, but this remains concentrated on energy and intermediate goods, which should limit the pass-through. These views are also embodied in the Eurosystem staff projections.