Inflation has been close to or above 3 per cent for more than a year. This would be a source of concern if we expected the situation to persist long enough to become entrenched in expectations. But, as I said earlier, inflation is likely to decline in coming quarters, and overall growth in labour costs is consistent with the inflation target.
These figures contrast with the much lower rates of increase occurring in major economies overseas where demand is much weaker and inflation targets – implicit or explicit – are, or are in danger of, being undershot. Before leaving the domestic economy, I will make a few remarks about the growth of credit.