Net migration however has had a smaller impact on broader inflationary pressures than in past cycles. One reason is the boost it provides to the labour force. In the two years to June 2015, the labour force expanded by 6.1 percent, enabling strong employment growth of 6.7 percent to be absorbed with only a moderate increase in wage costs.
Moderate wage inflation, spare capacity and the decline in inflation expectations towards 2 percent have been important factors behind the subdued rate of non-tradables inflation. Structural elements linked to falling technology costs and the impact of on-line retailing may also have played a role.