•  The long-running expansion in domestic demand contributed to a build-up of pressures on capacity and high rates of domestically generated inflation. So far, weaker demand conditions have been slow to feed through into lower domestic inflation. In the building industry for example, rising prices for raw materials and strong wage inflation have continued to underpin high rates of construction cost inflation.
•  There have also been sizeable price increases in areas not directly exposed to a high degree of competition over the past few years. Increases in local authority rates have run well in advance of overall CPI inflation for a number of years. Cost increases in some utilities have also been notable, particularly electricity.