Underlying inflation pressures continue to remain subdued as unutilised resources still weigh on wage and price formation. Inflation rates excluding energy and unprocessed food, for instance, have remained below 1% for almost a year. Importantly, inflation dynamics continue to be conditional on a very substantial degree of monetary accommodation.
We have spoken also about how, on the other side, household behaviour has changed – people are saving more and borrowing less. Spending is growing in line with income, but people are spending their money differently. The retail sector is finding it has to adapt to this changed environment. Some other industries are struggling with the high exchange rate.