Low non-tradables inflation largely reflects the impact of strong factor accumulation that has expanded capacity, and enabled strong demand growth to be met without increased inflation pressures.
This is particularly the case in the labour market, where record levels of net immigration and historically high labour force participation, along with natural increase, have expanded the labour supply by around 3 percent over the past year (figure 3), and enabled a strong rate of employment growth to be absorbed without any acceleration in wage inflation.