Indeed, in those sectors where labour market conditions are tightest, such as the information and communication sector, compensation per hour was already expanding at an annual rate of nearly 4% in the final quarter of 2021.
In both scenarios, therefore, underling price pressures are likely to remain elevated, meaning that inflation could stay at painfully high levels for a considerable period of time, with a risk that it might fall back towards our target of 2% at a slower pace than previously envisaged.