Looking forward, given the current futures prices for oil and other commodities, the annual inflation rate in the euro area is likely to remain significantly above the level consistent with price stability for a considerable period of time before declining only gradually in the course of 2009.
With regard to the outlook for price developments, the main and serious concern is that a protracted period of high inflation, even if it is largely due to the direct and indirect effects of previous commodity price increases, has the potential to adversely affect price and wage-setting behaviour and short to medium-term inflation expectations, thereby inducing a wage-price spiral via broadly-based second-round effects.