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mpc: 2 A4 Japanese GDP had grown by 1% in Q2, having benefited from a strong contribution from public expenditure of 0.9 percentage points. Private consumption had made a 0.6 percentage point contribution to GDP growth. In contrast, investment had made an equivalent negative contribution, though this was not in line with either the monthly indicators or strong corporate profit growth, both of which had been on an upward trend since mid-1999. The Tankan survey had shown business conditions improving for the seventh consecutive quarter. Industrial production had risen by 3.3% on the month in August and by 8.3% on a year earlier. A5 In the emerging market economies, industrial production had been rising at an annual rate of about 8% since the start of the year. But equity indices in emerging markets had recently fallen back, particularly in Asia. A6 Futures prices were indicating a fall in oil prices to about $25 per barrel in two years' time. OPEC production was now back at levels seen in 1998, though world demand had risen since then. Bank analysis of options price data had suggested that one outcome of the US government's announced release of part of its strategic oil reserves was to have reduced noticeably the probability the market attached to a rise in the oil price above $40 per barrel in the coming months. A7 US import price inflation was below the rate at the start of 2000. US consumer prices had fallen by 0.1% on the month in August, probably reflecting a temporary dip in the oil price and associated effects on petrol prices. Core inflation had risen by 0.2% on the month, leaving the annual rate slightly higher at 2.5%. Nevertheless, inflation expectations for the United States remained steady. Unit labour costs had eased, falling by 0.5% on a year earlier in Q2. A8 HICP inflation in the euro area had fallen slightly in August to 2.3%, while core inflation had remained at an annual rate of 1.3%. The September release of German annual CPI inflation at 2.4% (compared with 1.8% in August) implied that a pick-up would probably be evident in the September euro-area inflation rate.