However, signs of a more broad-based reduction in inflationary risks are also increasingly emerging. Reflecting these trends, the March 2009 ECB staff inflation projections constitute a significant downward revision compared with the previous projections and foresee annual HICP inflation at between 0.1% and 0.7% in 2009.
Owing mainly to base effects stemming from the past behaviour of energy prices, headline annual inflation rates are projected to decline further in the coming months, possibly temporarily reaching negative levels around mid-year. Thereafter, annual inflation is expected to increase again, also owing to base effects stemming from past energy price developments.