Together, these factors have altered wage and pricing dynamics in almost all advanced economies and these changes are likely to persist. This means that, in the absence of another major shock, it is a long way back to seeing wage increases consistent with the inflation target. Wages, of course, are only one factor influencing inflation outcomes.
We will be reminded of this when headline CPI inflation increases temporarily to around 3 per cent in the June quarter because of the reversal of some pandemic-related price reductions.