eased somewhat ” and “ eased considerably ”. the net percentages for responses to questions related to contributing factors are defined as the difference between the percentage of banks reporting that the given factor contributed to a tightening and the percentage reporting that it contributed to an easing. “ cost of funds and balance sheet constraints ” is the unweighted average of “ banks ’ capital and the costs related to banks ’ capital position ”, “ access to market financing ” and “ liquidity position ” ; “ risk perceptions ” is the unweighted average of “ general economic situation and outlook ”, “ industry or firmspecific situation and outlook / borrower ’ s creditworthiness ” and “ risk related to the collateral demanded ” ; “ competition ” is the unweighted average of “ competition from other banks ”, “ competition from non - banks ” and “ competition from market financing ”. the net percentages for “ other factors ” refer to an average of the further factors which were mentioned by banks as having contributed to changes in credit standards. the latest observations are for the fourth quarter of 2023. the restrictive stance of our monetary policy has contributed to the stagnation of euro area real gdp in the last six quarters. given that monetary policy operates with a lag, it will continue to exert a negative impact on economic activity, with growth projected to remain anaemic in the first quarter of 2024. in particular, private consumption in the euro area has been subdued. euro area retail sales were broadly unchanged at the start of the year, pointing to continued weak dynamics in spending on goods, and consumer confidence remains below its long - term average ( chart 10 ). chart 10 retail sales, consumer confidence and business expectations in the euro area retail sales and sales by type of good in specialised stores consumer confidence and business expectations ( indices : q4 2021 = 100 ) ( panel a ) : standardised percentage balances, panel b : percentage balances ) sources : left - hand panel : eurostat and ecb calculations ; right - hand panel : european commission and ecb calculations. notes : right - hand panel : panel a ) : standardised over pre - covid period ( standardised over april 2019 - january 2024 ), expectations over next 12 months ; panel b ) : demand for services and retail trade business situation over the next three months, motor vehicles refer to sale and repair, contact - intensive services are an aggregation of food, accommodation and travel services based on hicp weights

from 4. 5 % in 2022 ), slightly below headline inflation, which stood at 5. 4 % ( down from 8. 4 % in 2022 ). in 2024 compensation per employee is projected to increase by 4. 5 % and annual average headline inflation is projected to be 2. 3 %. 8. based on findings from the price - setting microdata analysis network ( prisma ). see dedola, l., henkel, l., hoynck, c., osbat, c. and santoro, s. ( forthcoming ), “ what does new micro price evidence tell us about inflation dynamics and monetary transmission? ”, economic bulletin, ecb. 9. arce, o. et al. ( 2023 ), “ how tit - for - tat inflation can make everyone poorer ”, the ecb blog, 30 march. 10. with inflation projected to remain too high for too long, the ecb had to prevent a de - anchoring of inflation expectations. this danger warranted substantial policy rate increases to safeguard against the materialisation of upside risks. 11. the pace of decline in our balance sheet has been driven by maturing and early repayments under the third series of our targeted longer - term refinancing operations. we also brought both the full and partial reinvestment phases of our asset purchase programme to an end and, at the end of 2023, announced the gradual phasing - out of reinvestments under the pandemic emergency purchase programme. 12. longer - term inflation expectations were revised down by 0. 1 percentage points to 2. 0 % in the latest survey of professional forecasters ( first quarter of 2024 ). expectations for long - run expected hicp inflation also remained unchanged at 2. 0 % in the most recent survey of monetary analysts ( march 2024 ). 13. specifically, since may 2023. 14. empirical analysis by ecb staff shows that core inflation is not a timely indicator of medium - term inflation and that using current core inflation to forecast future headline inflation does not produce substantial gains compared with a simple autoregressive model, especially over short horizons. see also lenza, m. and reichlin, l. ( 2011 ), “ should the ecb use core inflation as a signal for medium - term inflation? ”, voxeu column, 24 june and panetta, f. ( 2023 ), "