In practice, it would appear that such responsiveness has not increased over the last decade, while empirical evidence supporting a growing role of global measures of economic slack in the inflation process of the euro area and other advanced economies has been limited. On balance, not only is the net effect of globalisation on euro area prices difficult to accurately gauge, but it may also be changing through time. For this reason, the ECB continues to actively monitor possible ongoing changes in the inflation process. At the same time, efficient adjustment can be best facilitated by focusing on price stability and continuing to solidly anchor inflation expectations in the face of considerable relative price shocks. Developments in the real estate sector Let me conclude with some remarks on residential property prices. As with other asset prices, residential property prices are closely monitored by the ECB in terms of our economic analysis. Within this context, while we take the euro area real estate sector into account in assessing risks to price stability, we certainly do not target house prices, or for that matter, any other asset prices. We do monitor asset prices closely because of the potentially high costs for price stability and for the economy as a whole that are associated with strong appreciations and rapid reversals in asset prices. Also, our monetary analysis covers the monitoring of money and credit which often reflect the evolution of prices and house purchases.
The expectation of an improvement in economic activity in the euro area is contingent on a recovery of growth in private consumption, supported by a reduction in actual and perceived inflation rates. This expectation is also based on a projected gradual recovery of the world economy and export growth which, together with the low level of interest rates, should help to strengthen investment. Nevertheless, the uncertainty surrounding this scenario remains high. It is therefore very difficult, at this juncture, to predict the timing and strength of the economic upswing, both in the euro area and globally. Turning to recent price developments, in September annual HICP inflation was 2.1%. For October, Eurostat's flash estimate indicates an annual HICP inflation rate of 2.2%. This increase is again likely to reflect developments in energy prices, although no detailed information is available at present. Looking at price developments for the remainder of 2002 and the early part of next year, despite the recent decline in oil prices, some upward impact may occur reflecting base effects and country-specific developments - such as increases in indirect taxes or specific developments in services prices. Although difficult to anticipate, particularly due to the volatility of oil prices, a further increase in the annual rates of inflation around the turn of the year and a delay in the return to inflation rates below 2% cannot be ruled out. However, this further increase should only be temporary.