GDP growth slowed gradually from an above-trend pace throughout 2007 to an annualised rate of 1.5% in the first quarter of 2008. A further slowing is expected over coming quarters, as both investment and consumer demand are damped by tight credit conditions and housing market weakness. Consumer price inflation has accelerated in recent months and is expected to rise further to above 3½ per cent later this year before falling back to close to the inflation target during 2009.