whereas the labour market is expected to remain resilient. however, the relative contributions of supply and demand conditions are likely to change over time. in particular, the release of pent - up demand largely explains the recent contribution of demand to inflation. this is different from a cyclical upswing that “ feeds on itself ” [ 12 ], or a sustained increase in consumption as seen in the united states as a result of a highly expansionary fiscal policy and rapidly rising wages ( chart 4, panel a ). that is why, in the euro area, the demand - driven contribution to core inflation has emerged more slowly over time ( chart 4, panel b ). but forward - looking indicators point to a significant weakening in demand, which suggests that its contribution is likely to fade out ( chart 5 ). chart 4 evolution of private consumption and demand - driven contributions to core inflation in the euro area and the united states ( percentage points contributions ) sources : panel a ) : eurostat, fred and ecb staff calculations. panel b ) : frsf / adam shapiro, eurostat and ecb staff calculations. notes : panel a ) : the latest observation is for the third quarter of 2022, except for euro area household and non - profit institutions serving households ( npish ) final consumption expenditure for which the latest observation is for the second quarter of 2022. panel b ) : seasonally adjusted series ; based on an application of shapiro, a. h. ( 2022 ), “ how much do supply and demand drive inflation? ”, frbsf economic letter, no 2022 - 15, federal reserve bank of san francisco, 21 june ; and shapiro, a. h. ( 2022 ), “ decomposing supply and demand driven inflation ”, working papers, no 2022 - 18, federal reserve bank of san francisco, october. for euro area results see goncalves, e. and koester, g. ( 2022 ) : “ the role of demand and supply in underlying inflation – decomposing hicpx inflation into components ”, economic bulletin, issue 7, ecb. the latest observations are for august 2022 for the euro area and september 2022 for the united states. chart 5 euro area household expectations and purchasing managers ’ index sources : panel a ) : dg - ecfin and ecb staff calculations. panel b ) : s & p global. notes : panel a ) : expectations for the next 12 months, standardised

mario draghi : euro area economic outlook, the ecb ’ s monetary policy and current policy challenges statement by mr mario draghi, president of the european central bank, prepared for the thirty - first meeting of the international monetary and financial committee, washington dc, 17 april 2015. * * * the economic situation and the short - term outlook for the euro area are currently brighter than they have been for several years. various factors are helping to boost confidence that the weak and uneven recovery experienced up to now will gain strength and breadth. the ecb has pursued its price stability mandate with determination so that inflation will return to a level below, but close to, 2 % over the medium term. a strengthened financial sector, an accommodative macroeconomic policy setting, sound fiscal policies and a determination by euro area governments to pursue structural reforms should allow the euro area to embark on a sustainable growth path in a context of price stability. the ongoing recovery, which started almost two years ago, is now more firmly taking hold. euro area real gdp rose by 0. 3 %, quarter - on - quarter, in the last quarter of 2014, driven mainly by domestic demand and especially private consumption. the latest data and survey evidence suggest that the euro area economy has gained further momentum since the end of 2014. looking ahead, the economic recovery is expected to broaden and strengthen gradually. domestic demand should be further supported by the ongoing improvements in financial conditions resulting from our monetary policy measures, as well as by the progress made in fiscal consolidation and structural reforms. moreover, the lower level of the price of oil should continue to bolster households ’ real disposable income and corporate profitability. euro area labour markets are gradually improving. employment continued to grow in the fourth quarter of 2014 and the level of unemployment is continuing to fall gradually from elevated levels. at the same time, the euro area recovery is likely to continue to be dampened by necessary balance - sheet adjustments in a number of sectors and the sluggish pace at which structural reforms are being implemented. while remaining on the downside, the risks surrounding the euro area growth outlook have become more balanced on account of the recent monetary policy decisions, the fall in oil prices and the lower euro exchange rate. hicp inflation in the euro area turned negative in december 2014 mainly on account of the sharp drop in oil prices observed last year. looking ahead, inflation is expected to remain very low or still negative in the coming months. however, supported by