This, together with our higher terms of trade and strong investment growth in the presence of some capacity constraints, is exerting an expansionary influence on domestic activity and upward pressure on inflation, mainly at the producer price level, although we also expect consumer price inflation to increase somewhat from its present rate.
At the same time, the economy is at present being affected by some countervailing forces. Consumption has slowed and house-building and farm output are falling; these have exerted a moderating influence and may continue to do so.