levels. looking ahead, the slowing economy is likely to lead to some increase in the unemployment rate. fiscal support measures to cushion the impact of higher energy prices should be temporary and targeted at the most vulnerable households and firms to limit the risk of fuelling inflationary pressures, to enhance the efficiency of public spending and to preserve debt sustainability. structural policies should aim at raising the euro area ’ s growth potential and supporting its resilience. inflation inflation rose further to 9. 1 per cent in august. energy price inflation remained extremely elevated, at 38. 3 per cent, and it was again the dominant component of overall inflation. market - based indicators suggest that, in the near term, oil prices will moderate, while wholesale gas prices will stay extraordinarily high. food price inflation also rose in august, to 10. 6 per cent, partly reflecting higher input costs related to energy, disruptions of trade in food commodities and adverse weather conditions. while supply bottlenecks have been easing, these continue to gradually feed through to consumer prices and are putting upward pressure on inflation, as is recovering demand in the services sector. the depreciation of the euro has also added to the build - up of inflationary pressures. price pressures are spreading across more and more sectors, in part owing to the impact of high energy costs across the whole economy. accordingly, measures of underlying inflation remain at elevated levels and the latest staff projections see inflation excluding food and energy reaching 3. 9 per cent in 2022, 3. 4 per cent in 2023 and 2. 3 per cent in 2024. resilient labour markets and some catch - up to compensate for higher inflation are likely to support growth in wages. at the same time, incoming data and recent wage agreements indicate that wage dynamics remain contained overall. most measures of longer - term inflation expectations currently stand at around two per cent, although recent above - target revisions to some indicators warrant continued monitoring. risk assessment in the context of the slowing global economy, risks to growth are primarily on the downside, in particular in the near term. as reflected in the downside scenario in the staff projections, a long - lasting war in ukraine remains a significant risk to growth, especially if firms and households faced rationing of energy supplies. in such a situation, confidence could deteriorate further and supply - side constraints could worsen again. energy and food costs could also remain persistently higher than expected. a further deterioration in the global economic outlook could be

growth, which have been revised down markedly for the remainder of the current year and throughout 2023. staff now expect the economy to grow by 3. 1 per cent in 2022, 0. 9 per cent in 2023 and 1. 9 per cent in 2024. the lasting vulnerabilities caused by the pandemic still pose a risk to the smooth transmission of our monetary policy. the governing council will therefore continue applying flexibility in reinvesting redemptions coming due in the pandemic emergency purchase programme portfolio, with a view to countering risks to the transmission mechanism related to the pandemic. the decisions taken today are set out in a press release available on our website. a separate technical press release on the remuneration of government deposits will be published at 15 : 45 cet. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. economic activity the euro area economy grew by 0. 8 per cent in the second quarter of 2022, mainly owing to strong consumer spending on contact - intensive services, as a result of the lifting of pandemic - related restrictions. over the summer, as people travelled more, countries with large tourism sectors benefited especially. at the same time, businesses suffered from high energy costs and continued supply bottlenecks, although the latter have been gradually easing. while buoyant tourism has been supporting economic growth during the third quarter, we expect the economy to slow down substantially over the remainder of this year. there are four main reasons behind this. first, high inflation is dampening spending and production throughout the economy, and these headwinds are reinforced by gas supply disruptions. second, the strong rebound in demand for services that came with the reopening of the economy will lose steam in the coming months. third, the weakening in global demand, also in the context of tighter monetary policy in many major economies, and the worsening terms of trade will mean less support for the euro area economy. fourth, uncertainty remains high and confidence is falling sharply. at the same time, the labour market has remained robust, supporting economic activity. employment increased by more than 600, 000 people in the second quarter of 2022 and the unemployment rate stood at a historical low of 6. 6 per cent in july. total hours worked increased further, by 0. 6 per cent, in the second quarter of 2022 and have surpassed their pre - pandemic