recent months but remain weaker than before russia's unjustified war against ukraine and its people. we see a divergence across sectors of the economy. the manufacturing sector is working 1 / 4 bis - central bankers'speeches through a backlog of orders, but its prospects are worsening. the services sector is growing more strongly, especially owing to the reopening of the economy. household incomes are benefiting from the strength of the labour market, with the unemployment rate falling to a new historical low of 6. 5 per cent in march. employment has continued to grow and total hours worked exceed pre - pandemic levels. at the same time, the average number of hours worked remains somewhat below its pre - pandemic level and its recovery has stalled since mid - 2022. as the energy crisis fades, governments should roll back the related support measures promptly and in a concerted manner to avoid driving up medium - term inflationary pressures, which would call for a stronger monetary policy response. fiscal policies should be oriented towards making our economy more productive and gradually bringing down high public debt. policies to enhance the euro area's supply capacity, especially in the energy sector, can also help reduce price pressures in the medium term. in this regard, we welcome the publication of the european commission's legislative proposals for the reform of the eu's economic governance framework, which should be concluded soon. inflation according to eurostat's flash estimate, inflation was 7. 0 per cent in april, after having dropped from 8. 5 per cent in february to 6. 9 per cent in march. while base effects led to some increase in energy price inflation, from - 0. 9 per cent in march to 2. 5 per cent in april, the rate stands far below those recorded after the start of russia's war against ukraine. food price inflation remains elevated, however, standing at 13. 6 per cent in april, after 15. 5 per cent in march. price pressures remain strong. inflation excluding energy and food was 5. 6 per cent in april, having edged down slightly compared with march to return to its february level. non - energy industrial goods inflation fell to 6. 2 per cent in april, from 6. 6 per cent in march, when it declined for the first time in several months. but services inflation increased to 5. 2 per cent in april, from 5. 1 per cent in march. inflation is still being pushed up by the gradual pass - through

and credit growth in this environment continues to point to upside risks to price stability over the medium to longer term. monetary developments, therefore, require careful monitoring, especially in the light of the strengthening of economic activity and, in particular, of strong asset price dynamics, especially in housing markets. to sum up, annual inflation rates are projected to remain elevated in 2006 and 2007 and the economic analysis confirms that the risks to price stability continue to lie on the upside. some of these risks appear to have increased in view of the renewed strength of oil prices. given strong money and credit growth in a context of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium to longer term. it therefore remains crucial to ensure that medium to long - term inflation expectations in the euro area are kept solidly anchored at levels consistent with price stability – a prerequisite for monetary policy to make an ongoing contribution to sustainable economic growth and job creation. accordingly, particular vigilance is of the essence in order to ensure that risks to price stability do not materialise. with respect to fiscal policies, there are some signs that the implementation of the stability and growth pact and commitment to the rules have improved since last year ’ s revision. however, fiscal targets in a number of cases are rather lenient and their attainment is still subject to considerable risks. the governing council therefore supports any further reinforcement of fiscal consolidation efforts that also takes full advantage of a more favourable economic environment. appropriately ambitious fiscal targets as part of a comprehensive structural reform programme would bring deficit and debt ratios down more rapidly. this is decisive in order to secure the sustainability of public finances. such strategies would also boost confidence in the economic prospects of the euro area. as regards structural reforms, the governing council again stresses the importance of undertaking comprehensive reforms to ensure open, competitive and well - functioning labour and product markets, including the promotion of wage and price flexibility and the fostering of an attractive environment for investment and innovation. the need for such reforms has again been highlighted by recent oil price developments, as they would enhance the resilience of the euro area economy to external shocks. there is a broad and firm consensus that openness and flexibility are beneficial in promoting growth and employment and it is now essential to turn the agreed reform plans into actions and to strengthen them where necessary. by pushing forward with ambitious structural reforms, euro area countries will also