Thank you everyone for joining this conference call. So, I'm going to start, first, by giving you an update, if you've been following PriceStats closely, on what we are introducing as new indices in the next few months. First, most of you know, we produce indices in about 22 countries, we're adding a new one now, Mexico, where we have been collecting inflation for quite a while, you're now going to be able to access a new data inflation series just like the other countries. We're also producing an apparel index for the US, which is the country where we show sectoral information as well. I'm going to show you some results today for what we call our Augmented US Inflation series that incorporates some sectors that were not in our series in the past, but have proven quite important during Covid. So, I'll show you some results. If you're interested in what's happening soon on Q1 of 2022, we are introducing some new products related to forecasting, particularly in the US, and in addition some new PPP series that I'll describe, in fact, for a couple of countries in these slides today. But let me just go into the topic of interest which is what is happening with inflation globally. You're looking at your screen right now at our global index which is produced by aggregating the information from all the countries where we collect data online, and as you can see there, the inflation rate has been rising lately. A couple of months ago, things were quite different, we were seeing stabilisation of the rate at a very high level, but we were more optimistic that the trend could go down in the future. Now, things have actually turned and we're seeing inflation continue to rise. If we look across all the countries where we're producing, this is, you can see that we are at peak levels of inflation; this chart shows you the full range of inflation rates we have documented in these countries for the last 13 years. These red dots show you in nearly every single case we're at the maximum level, including, I should say, a few countries where we were seeing low levels of inflation, the trend is now reversing. I'll mention, for example, the case of China where we produce a Fresh Food in Supermarket Index, in a second. In the US, the country that has attracted a lot of attention recently, you can see our index there, as I mentioned this pause that we were seeing in the past was quite dramatic in the case of the US, that, as you can see, has changed in the past month or so and the inflation rate is now rising faster than before; a trend that you can see in our index and the CPI. There's a difference between our index there in the level compared to the CPI, and that has to do with some sectors related to travel that were not incorporated into our index in the past, simply because it's hard to find data online, and also to mimic the methodologies used by CPIs in the US and other countries. But as I mentioned, we have been producing during Covid, and it will be available soon in the platform that some of you will have access to. We made an effort to produce what we call an Augmented Index that introduces some of these experimental sources of inflation, and that index itself has information on a few sectors, as I mentioned, that were quite important during this pandemic. Things relating to travel in particular and perhaps looking forward, even more important, what will happen to rent. But let me just say, this changes the level of inflation measured, but it doesn't change the dynamic story that I was telling you before, even in this augmented version we were seeing some sort of stability in the last six months that is reversing itself and now in both cases we're seeing in the inflation trend, which is worse. Overall, if you look at the last 12 months, it has been an incredible period. I would say in the last 12 months, in almost every single month, we have been at levels of inflation that were above the average levels we have seen in the last 13 years, in the case of the US. Several topics, or sources, of inflation have been mentioned describing this new inflation rate, I'll start with the one that has attracted the most attention, supply disruptions. Some of you may have seen me present this work in the past, PriceStats has this ability to see the shortages that exist in online retailers in many companies around the world. When we go to these websites, we can see goods that are displayed as being out of stock, and we can also compare how many goods are available today relative to pre-pandemic levels. That is information we can use to build measures of shortages in stockouts as a way to infer where we're likely to see more inflationary pressures coming from the supply disruptions, and these indices that you're looking at here show you results for several countries. I want to emphasise a few things; we're seeing big spikes in stockouts in the case of the US and other countries, but particularly in the case of the US it was coming in waves. The last wave or peak, if you will, happened in May of this year, and since then we've actually seen quite an improvement. This means the goods are now available on stores; in the vast majority of sectors that we monitor, perhaps the only outlier or exception right now is the case of Canada. But most of the other countries, we have seen a dramatic improvement, suggesting that these disruptions are over on this level in many of these retailers. But, when you look at the details, there are some sectors that are still suffering large levels of shortages in the US in particular I'm highlighting two here that remain quite high; one of them is food, which has been a particularly strong source of inflation. The other one is electronics. Those sectors exhibit persistent shortages that continue to this day, and perhaps not surprisingly, food is one of the sectors where we have seen a gradual increase in inflation that has not disappeared for the whole year, in fact, it has been getting worse and worse over time, as you can see in this chart on the left, the actual indices, and on the right, the levels relative to historical values particularly in the last four or five months, we have seen levels of inflation that are way above average for this time of year in food within the US. Now, even if sectors like food and electronics improve, or we have seen the overall level of stockouts decline, my research suggests that the effects on inflation of some of these supply disruptions actually last for quite some time. In fact, roughly over a quarter after we see some of these stockouts disappear, we're still seeing higher levels of inflation. So even if, as I mentioned there in the title, even if the stockouts were to completely disappear in all sectors, the inflationary effects are likely going to continue for about another quarter. The other dimension that has been brought up as driving some of this higher inflation has to do with this pent-up demand that has been delayed and now as the economies are reopening, there's a push towards that. We capture at PriceStats this information indirectly by looking at the behaviour of sales or promotions within retailers; these sales tend to be very counter-cyclical, so if there's a big increase in demand many of these retailers lower the level of sales. If you look at the data across sectors in the US, some of them are back to normal. I'm highlighting here the example of clothing, which has been sort of normal for quite a while. But there are other sectors where we're still detecting very low levels of sales, suggesting that there's still high levels of pent-up demand that will probably take a while to disappear. So, this is another of the main factors that we can see in the data. But I want to highlight a couple of things, and Marvin, I'm sure, will say more about these issues. In terms of inflation risks moving forward there are two dimensions that I think are important to keep an eye on. One of them is rent. So, what you're looking at here is an index we can construct with rents, that are available online. That's the blue line, and on the... next to it you see an index produced by the Bureau of Labor Statistics in the US, which is rent of primary residence. And there's a big gap happening in this indices right now,
you may have seen other companies producing similar indices to this blue line for example, St Louis produces something quite similar, but I want to clarify something; there's a caveat with our index and other indices that rely on this information, and it's the fact that these indices are created as an average of available rents, And the apartments that become available over time can shift dramatically. Right now, there appears to be a lot of availability of apartments that are renovated, that increases the pressure and makes these
indices look quite high. The CPI, by contrast, samples a fixed basket of apartments, therefore, the adjustment here will take much longer to actually materialise or to rise, like you see right there in the graph. But nevertheless, there's going to be pressure if the strain continues as we move forward, and I think it's one of the greatest risks for 2022. And the other one is obviously what's happening with wages up to this point in the pandemic. Again, there were some compositional issues in the labor market, there was no obvious evidence that wages were increasing in the US, but that has changed in the last quarter. I'm showing you here the one index that the BLS produces tha tries to control for compositional labor shifts among occupations, and this index actually had a big increase in the third quarter of 2020. So, to some degree we're seeing some of these additional costs affecting retailers, not just on the supply side but also in terms of wages which could be putting additional pressure on them to pass on price increases. I still don't see a wage inflation spiral here, but I think it's one of the dimensions that we need to keep an eye on moving forward. Let me move to a more global basis and show you what's happening around the world with our indices. You're looking at the developed market and emerging market indices, both of them aggregate countries with those characteristics. They both have similar trends to some extent, they've shown a big increase in some stability in the past six or seven months, in the case of developed markets that seems to be changing. What are the drivers of inflation? In this case it's shifting, it's becoming more about commodities, and I'm highlighting here what happens with our indices of food and fuel on a global basis. Fuel was more important at the beginning of and certainly food is rising; a lot of the increases were seen in the US and in other countries. It's a change in the nature of the inflationary pressures, but it's contributing to some of these additional increases. In terms of all the countries where we produce data in comparisons to the CPI, I will say that in most countries, we were seeing higher levels of inflation with online data than in the CPIs. But the CPIs have caught up with our indices almost everywhere, there's very few countries where I would still see a big difference between our index and the CPIs. There are a couple that I would highlight. These slides were made a couple of weeks ago, so the UK Index was not updated then, but that was one country where we were seeing higher levels of inflation and if you take the latest numbers on the CPI, you would see that has caught up already. But there are others, there's South Africa there's the perennial developing countries like Brazil and Turkey where we've been seeing higher levels of inflation since the pandemic started. And since we're in an Asia conference, I want to highlight two that are quite important; in the case of Japan, as some of you may know, the CPI is still not showing high levels of inflation. Perhaps an exception around the world. It's not an exception in our data; in our data we are finding much higher levels of inflation and a divergence between our index and the CPI. And then something quite similar perhaps, but more recent, is happening in China. There we produce a food in supermarket index, for much of 2021 we were actually seeing deflation in these indices and the trend is now reversing. It's one of the few countries where we were not getting higher inflation. It now seems to be on a different trend. Moving ahead, and thinking about what could be driving some of these pressures in Japan, for example, and some developing countries, I want to highlight the work we do on PPP; these are metrics we created to value identical basket of goods in these countries relative to the rest of the world. When there's a depreciation of currencies, usually the basket becomes very cheap and there's pressure for an adjustment that could come from prices or from the exchange rate appreciating. In the case of developing countries, or... in particular Japan as well here, that's where we're seeing the biggest deviations; cases of Argentina, Brazil, for example. I will highlight Brazil; I think one of the reasons we're seeing much higher levels of inflation recently has to do with this deviation that has corrected itself through higher inflation than the US, but there's still a lot of pressure there that could continue to bring inflation up.

So let me summarise, then, some of the main takeaways. First, inflation is accelerating in contrast to what we were seeing just a few weeks ago. The countries to watch, that I mentioned are the US, Japan, China, Brazil and Turkey, if you look at our data, you're going to find interesting trends there. Food and energy are now the main drivers of inflation, instead of supply disruptions which were more important at the beginning of the year. In the US in particular, we saw those supply disruptions as measured by stockouts falling, but they remain quite high for some sectors like food and electronics. And we're still seeing some evidence of pent-up demand in sales behaviours. But thinking ahead of potential risks, I mentioned a couple in the case of the US; rents and wages. And for other countries, I suspect we're going to see some exchange rate passthrough building particularly in developing countries as the countries like the US and Europe, and some other developed countries, are raising rates, potentially at the beginning of next year. So, we'll keep you updated on some of that. Let me finish there and go to Marvin.

Great, thanks Alberto. Given that great overview, I think I'll focus on a few of the subsectors that Alberto mentioned in terms of the biggest risk in the market, mainly around rents as well as on the wage front, and why, ultimately, we think that the trends are one where those prices will stabilise. But I guess I'll start by ultimately agreeing with the FED, that we too are ready to retire the word 'transitory', we're certainly tired of talking about it as much as we have this year, and to be honest we've been using the stubborn price description around inflation for several months now because certainly the discussion around inflation has really evolved significantly this year. Remember about 7-8 months ago, we were all worried about used car prices, we were all worried about the cost of airline flights as well as hotel all of those reopening categories, if you will. When we look at the components that drove the monthly inflation over the course of the last few months, those reopening categories, those used car price increases have stabilised. They are somewhat troublesome recently in that they're uptaking again, but it really is other categories that have been driving it, like Alberto mentioned. Certainly energy, which is that big orange bar within this chart. But to us, energy is ultimately the definition of transitory; it will stabilise, and it will either reverse but certainly not increase at the levels that we've seen. More troubling, however, is this housing component, which is the purple within that bar, you'll see that it is a bigger and bigger component, and I'm going to share some of that I have within the shelter aspect of it. And then... a broad category of all of it. It certainly includes a bit of the food there's transitory aspects to that, once the transportation networks unclog. But certainly there are wage implications to that, and I think that's really where the FED, ultimately, is going to focus on. So, in terms of how we look at shelter; it is going to pose a problem as we go into next year. Ironically, the broad concept of shelter, which is the owner occupied rents as well as the rental costs, has been one of the most stable parts of CPI even though it's the biggest weight with CPI. Prior to the pandemic, it averaged about 3% year/year growth, for the most part for a five year period. We tried to represent that on the left here, with that dotted line. Actual results are the solid line on that chart. And you'll see that they've fallen behind during the pandemic, and now we're at that make up phase; the difference between those two lines is starting to close. But if we were just to get back to trend, if you will, that 1.2% or so difference between what the trend line is and where we actually were, that adds 10 basis points to the average monthly shelter cost. And if we go through that over the course of the next 12 months, you're going to see shelter have a bigger component. That's even before we take into account the big increase in real estate prices overall, which is represented on the right here, with Case-Shiller certainly surging and that shelter, OER component only now starting to catch up. But shelter costs are a tax, ultimately, and what we have here is just a look at OER, which is the solid dark blue line, relative to retail sales, which is on an inverted scale. When OER increases, we do see retail sales respond, so, it is a consumption tax. And while the shelter component is going to continue to push those CPI prints for the next several months. In a more intermediate term that retail spending, that consumption aspect that the consumer has is going to have an inverse relationship. So, in a more intermediate term, and I think the market is taking a sanguine view this when we look at how rates are pricing longer-term expectations, they do see the shock-absorber aspects associated with that. Now, on the wage side of things, borrowing a chart that Alberto had, certainly we also showed ECI on the left here, so, this Employment Cost Index
has been surging at a time when the number of employees in the job market is still well below where we were pre-pandemic. And you'll see on the right that the concentration of industries where we've seen workers not as reengaged in the workforce are somewhat concentrated. They're concentrated in low-income categories and they very much are concentrated in areas where there's great demand for those... for those jobs. So, what we tried to show here, ultimately, is just the amount of demand; 'Help Wanted' ads, if you will, on the X axis, that, relative to quit rates. And you'll see that some of the biggest categories, in terms of jobs that are in demand, have some of the highest quit rates; in particular, leisure, accommodation. The size of those dots represents their income, however, so these are low-earning jobs. So, as they get reengaged into the market, the overall increase in wages will decline. It certainly is a seller's market at this point, if you're actually able to offer your services into this market. But as those workers get reengaged into the market, it's really a question of whether or not we're going to see a fundamental shift in terms of how many of these employees are actually quitting, the way they are now. Now one of the aspects that's often discussed is the amount of savings that are in the market. And certainly we've seen, across the income categories, an increase from a percentage perspective in savings. But what you'll notice here is that, even if the bottom 50% of the income strata doubled their average savings, which they did, it still is a relatively low number; it's about $3500. And this data is going back to June. So, those savings quickly have been drawn down, will continue to be drawn down, and I think we're starting to see that make its way into some of the employment reports that we've seen over the course of the last few months. Once the enhanced unemployment benefits have ended, and once the savings start getting drawn down, we start to see these 500,000-600,000 person nonfarm payroll numbers come into the market. One of the big questions, however, is if there is a large increase in influx of employees back into the market, what jobs are left? What we tried to do here is really just look at where retail sales were, or are, relative to different industries and compare them to the number of employees that we've seen relative to the pre-pandemic level and you'll see that for the most part, all of these categories are back to where they were, if not ahead of the pandemic; it's the strong spending that we all look at. But it's also relative to a size of workforce that's much smaller, so these companies are making do with less, ultimately. And, if we do, again, get a large influx of employees back into the market, will the jobs be there? A standout certainly is large increases in both employees and retail sales, from the online world, and that directly impacts retailers. I think there are still stories that are left to be told, and this is probably the information the FED is looking for the most; where are the 4 million people that are not in the workforce, relative to where we were
pre-pandemic? And the size of the overall employment cohort is still 3 million less. So, that participation rate, and whether or not all of these employees are going to come back into the job market is probably the most important question for the FED as it tries to figure out when it's going to start hiking rates in the next... in the next several quarters. Now, from a market perspective, transitory - it'll be the last time I use it, I promise, is still very well priced into the market. This chart's a little bit challenging to look at, but it really is just looking at, in those two blue lines, the 5 year and 10 year breakeven. so, inflation expectations in the next 5-10 years, and that orange line is the gap between the two of them. It's never been higher. So, to me, that certainly represents an expectation and a repricing of inflation costs in the short-term, within this 5 year breakeven period, but a much more constructive view longer-term. So, as that gap grows, it's really saying that inflation is expected to increase and be much less transitory - oh, guess I lied - but much less transitory than it had been earlier this year. But longer-term, those prices will settle in. And that really is represented in changes in the rate outlook. So, within this chart, we just tried to show change in rate outlooks since the October FED meeting, relative to inflation expectations. And you'll see that within the 1-2 year period, there has been a fairly significant repricing of rate expectations. But that has pushed down forward rate expectations, and also has pushed down inflation expectations. So, the market still believes, ultimately, that the central banks, and the FED are going to be able to rein in inflation and/or there's a component of this Covid-impacted world where those shortages will naturally work their way out. And this is by no means just a US story. When we look at the G-10, in this instance, two year rate expectations versus five year rate expectations, you'll see that there's been a significant repricing of those two year rate expectations since the beginning of the fall. In certain instances quite spectacularly, where the Australia curve, the Canadian curve, have increased somewhere between 70 and 100 basis points within a two year period, so, three to four rate hikes have been built into those markets. The FED is slightly under three additional hikes being built into that market. But when we look at it from a five year perspective, Those five year expectations are nowhere near as aggressive as we've seen in the two year expectations. So, across the G-10, the real view is that this is going to be a very shallow rate-hiking cycle, and ultimately, the prospect of long-term yield rising significantly as these short-term yield reprice is just not there. And probably the most Accurate portrayal of that is just looking at term premiums. So, term premiums really represent the amount of excess growth that we'll have in the system, as well as the inflation risk in that system. And that blue line is still negative even though we've repriced the inflation discussion as much as we have certainly common inflation expectations which was presented here in the orange, is higher than it was pre-pandemic, but still, that term 'premium' continues to compress as investors continue to believe that the forward inflation outlook is much more contained than what we're seeing in prices right now. So, with that, I think I'll conclude, and hand it back to you, Dwyfor.

Thank you, Alberto and Marvin, and you guys went through that at a really decent speed actually, which has given us time for a Q&A session, and a little bit more time than we expected for a Q&A session, which is because I've got my trusty little iPad here, and with that I have a number of questions that have come through. So, we'll move to a Q&A for the remainder of the session. Thank you to all who have submitted questions. Just as a reminder, you can continue to ask questions throughout this Q&A session via the chat function. So, we have a number of questions here, actually, and we've got about 10 minutes or so before the end of the session, so we will run through these as best and as quickly as we can. Thank you again for submitting questions, let me just go through these questions and I think maybe there are a couple of them that both of you will have an opinion on.

Let me start off first of all with this question came through, in terms of whether there's been any systematic shift in inflation. That is, post-Covid, could there be a shift towards higher inflation contributed by factors such as changes in lifestyle choices? Things like spending on bigger houses, or things like spending on more domestic expenditure as opposed to the traditional spending patterns that we've become accustomed to in terms of work patterns, in terms of work arrangements. In other words, flexible work arrangements, and things like lifestyle choices, would they necessarily create a more permanent shift in inflation, going forward? Maybe I'll start with you, Alberto.

Great question. So, most of what you've described, I believe, in terms of lifestyle changes, that creates potentially some changes in relative prices. It doesn't necessarily create inflationary pressures in the long run. For us to see, you know, move into a higher inflation environment, that lasts several years, for example, we really need some sort of wage inflation spiral, we need a change in expectations; people constantly demanding higher wages. And we need policy makers to react differently to how they have been reacting to inflation in the past. They have to... It would be quite worrying to me if we did not see any reaction at all from central banks in the first quarter of next year, for example. So, those are the things that I look into, not necessarily changes in lifestyles, or people moving to more expensive houses, or to suburbs, or those sorts of things. They can certainly create relative price changes, maybe we'll travel less and there'll be a decline in the price level for some sectors related to travel, But that is a one-time thing. Changes in relative price
doesn't necessarily lead to very different inflation dynamics afterwards. So, I pay more attention to other things, and I think we need to keep a very close eye at what happens with policy moving forward to really get to this question of, 'are we moving into a high inflation environment or not?'. It is crucial to understand how policy will react. If I can add to that, Dwyfor. I was going to say, Marvin, on your side, it is inflation expectations, right, would say this to some degree.

Yeah, certainly inflation expectations. It is certainly an interesting question, because we are going through potentially one of the biggest migrations, at least in the US and likely globally with this much more flexible environment. Theoretically, it is actually more deflationary than inflationary in the way I think through things. The pool of workers that you have is now infinite if you will. Or, certainly much larger. And you are able to tap into them in a much more efficient manner. So that, by definition, is, to me, from a supply and demand perspective, somewhat more deflationary. I think that the bigger question in terms of the shift, however, is the size of the workforce at least in the US. There are 3 million less people now in the workforce than we were pre-pandemic. And we really don't know if they are on the side lines or if they have retired. If they actually have retired and they don't reengage with the workforce, then we potentially have wage pressure to a degree. But at this point, I don't believe the Fed expects it. I really think that they view this kind of transitory period within the employment landscape as one where it is going to take a few more quarters, but we are going to get to a point where we have a participation rate that starts increasing, and some of these workers make their way back in. If that is incorrect because of COVID, because of COVID fears, or whatever the reasons we have out there. That might be a much different type of wage discussion that we have within the next 6 months or so. But yeah, so far those inflation expectations remain very well-anchored, and expectations are that much of this will pass.

Alberto, I have got a question specific to you, actually. But, before that question, I want to move onto another question, because it does relate to this inflation expectations story, and I think you will both have a view on this as well. It is more to do, I guess, with the statistical nature of what we are seeing in inflation right now. The question is quite a long question, but the actual thrust of the question is quite an easy one, I think, to project, which is: Are markets underestimating a potential base effect led fall in prices in 2022
particularly, if all prices continue to reverse? And the way that this is being couched here is that, think of this in the context of very weak prices for 2020, which has created a bit of a statistical quirk for 2021. And put another way, should we not be looking at inflation over a 24-month period rather than, say, a 12-month period? This really comes down to the way that we are looking at, I guess, the year-on-year comparisons on inflation. Won't 2022, from a year-to-year perspective, be very different to what we are seeing in 2021?

Alberto, what is your view on it? It is a great question. I did some work to emphasise that the base effects in the US and in other countries were actually exaggerating the inflation rate a bit in 2021 due to changes in the composition of COVID consumption baskets, that the statistical agency was missing. And I think those were playing a role particularly at the beginning of the year, but they don't change the nature of inflation in the sense that we are seeing higher levels ruined by supply disruptions and other things. And just as the question suggests, certainly this is a one-time increase in costs, that increases the price level and then the price level remains high even if it doesn't fall, but it remains stable at high level, then there is a base effect that later on will tend to bring the annual inflation rate down naturally. Again, what I think is important is for us to get a sense of whether we're experiencing just a one-time increase in the price level, or a continued increase in forces that continue to drive that inflation rate up moving forward. That is, like I
mentioned before, where we have to think of things related to our wage inflation spiral, bear in mind a change in expectations that feeds into wages that workers demand, or, as I said, policy, I think, is going to be fundamental. But, the base effects are certainly going to play a role when there is so much volatility, and I think there are other statistical problems as well in terms of the actual data that is available to measure some categories. Part of the reason why I think we were able to capture a more gradual increase in prices with the online data was that that data has always been available. Many statistical agencies, by contrast, faces a situation which forced them to change dramatically how they were collecting prices. And for a while, they could simply not update their price series, and when they did, towards the end of the year, that is when we saw big increases. That is also playing a role introducing a lot of noise, and its worthwhile also keeping an eye on some of these dimensions as well.

Marvin, do you have anything to add to that? Or should we move onto the next question? Have you got anything to add on this statistical side?

Yeah, I mean what I would say is that we have sliced inflation, we have trimmed it, we have taken extreme medians, we have taken two years, and there is no doubt that prices are higher, even from the two year perspective. They're higher from the somewhat troublesome perspective. What I would add, however, is that there are two sides to this bottleneck situation that we find ourselves in. One certainly is that there are a lot of ships that are in the ocean that can't make their way into the ports and those goods can't get into the hands of people and prices are higher as a result of that. There is another potential view that there are a lot of goods on these ships that are eventually going to make their way into the ports and into people's hands. And, if it happens quickly, there will be an impact on prices also. So, you can make an argument that there are deflationary forces to be worried about, which seems odd, given that all we are concerned about really is higher prices. But, there are a lot of goods on the ocean right now, and they are all trying to make their way into the hands of consumers.

That is actually a really good segway into this third question, the one that I mentioned earlier that was specific to you, Alberto. Looking at the clock here, we are down to the last 3 minutes or so, so maybe this will be the last question. If we have a minute or so, we will add an additional question. But Alberto, the question directly to you, which related to what Marvin just said. Do you think that the goods price will be able to go to the pre-COVID level after the stockouts fade away? Or remain at the current high level?

I think that depends greatly on the sector. There are some sectors where we are seeing lower production, as Marvin was saying, there are some bottlenecks, but those goods may eventually arrive, and we will see a dramatic increase in supply. If there are no reasons to expects costs to continue to be higher that they were before the pandemic, then those prices have to come down. Sectors, though, where wages are an important component, those are sectors where the price increases might be more permanent. for example, the reason is that wages are very sticky on the way down. It is very hard for wages to come down. But again, that could lead, for example, if you think of prices at restaurants, to an increase in the price level, but not necessarily lead to permanently higher inflation rather than we will see a change in the relative price of what it costs to go to a restaurant than what it costs to, for example, buy a refrigerator. So, again, we have to distinguish between price levels and inflation rate, and I think we also have to bear in mind that it will depend a lot on the sector we are talking about. So, on the aggregate, there will be a little bit that will come down as well, but some of it will remain.

So, we will have to be quick. We have got one minute and one question that I am going to focus on. And as this is an APAC event, only right that we should look at some of the specific APAC countries. The question has come through. Japan has been looking for inflation for a very long time. So, if we continue to see accelerated inflation in Japan, isn't this a good signal for the Japanese economy? Maybe Marvin, do you want to take this one?

Yeah, certainly, the amount of inflation, surprising on the upside, is for the first time. Again, it is forward expectations, and the view is that it ultimately is not sustainable, and the pressure of the demographics, the pressure of disruption, really the pressure of the amount of debt is one where it is going to overwhelm even kind of the short-term bounces that we are seeing right now. You know, there still are no rate increase expected from the Bank of Japan, so, that speaks volumes when everyone else is talking a hawkish game.

Nearly every year, we have a question on Japanese inflation. Yes, Alberto. Just very, very quickly, since we are running out of time.

I think that the mistake that the centreline of the bank has made in the past is to react too quickly. So, I hope they don't make this mistake this time, and they let inflation rise. Because certainly, it looks positive from the perspective of getting Japan out of this very low inflation environment that it has been for quite some time.

I can nearly guarantee that we will have Japanese inflation questions again this time next year. Okay gentleman, this marks the end of the Q&A, thank you very much. Time is up, unfortunately. I would like to thank Alberto and Marvin for their insights on inflation and some of the market signals around inflation, so thank you, Marvin, and thank you, Alberto.