At the start of this year Andy Kyte, a leading analyst at Gartner, claimed that inflationary pressures would be one of the major challenges facing procurement over the next 12 months.

However, whilst the first eight months of 2007 have seen procurement dominated by issues surrounding risk and supply chain management, inflationary pressures in the eurozone have, up until now, taken a back seat.

Last week inflation in the UK dropped to 1.9% – a sharp fall on the 2.4% seen in June and the first time it has fallen below the Bank of England’s target rate of 2% since March 2006. Inflation in the eurozone followed suit, dropping to 1.8%, the lowest level seen this year.

So far so good then. However, a further statistical analysis by Eurostat, the statistical office of the European Union, suggests that tougher times could lie ahead.

‘Core inflation’ in the eurozone, to many a more accurate barometer of inflationary pressures, remained at 1.9% in July but jumped above the headline rate for the first time in three years, prompting fears that more interest rate rises could be on the way.

Despite the recent volatility in oil prices, and the apparent refusal of OPEC to take action, many analysts still believe that inflation will remain under the 2% barrier that has been the norm since the inception of the euro since 1999.

Whether this proves to be the case, or whether procurement executives will have to brace themselves for more price increases up until the turn of the year, only time will tell.