• Thank you, Megan, and thank you everyone for joining this presentation. I'm going to be describing some more updates I have from my own research on inflation dynamics during this period of COVID and also, leveraging all the PriceStats information that we have been collecting and producing in the past few months. To start with, some news about PriceStats and the indices. We've been developing a plan to release in the next few months, first available right now, we have produced new indices for Mexico that you see on the top of the screen. It's an aggregate index like all the other countries where we produce statistics on inflation, and we are, in the case of the US, as some of you know, historically, been producing sectoral indices as well. We just released an apparel index for the US, which you also have there on the screen. Now very soon, we're going to release what we call an augmented inflation index for the US that incorporates some sectors that have become particularly important in recent months, for the level of inflation. I'm going to show you a preview today of some of those numbers and then, looking forward into 2022, we've been doing a lot of work to improve forecasts of US inflation and release some numbers that you'll be able to access frequently, and as well, develop some of our new PPP series, like Canada and Mexico. I'm going to show you some examples of how PPP can be helpful in understanding inflation dynamics as well today. Let me start with the outlook of how things are going then. First, I want to make it very clear, as many of you suspect and have seen in CPI data, global inflation is rising once again. There was some stability in the last few months in some of our numbers. That train is reversing and we're again heading to higher levels of inflation, surpassing the peaks we have seen in the past in the 22, 23 countries where we now produce aggregate inflation series. Most countries remain at peak inflation levels. The highest levels that we have seen in the past 13 years since we started collecting data online, there are a few exceptions, but even those that looked like exceptions a few months ago are now achieving very high levels that are likely to lead them into peaks as well. The US is certainly the country that has received the most attention among many of our clients. I'm showing you here the performance in dynamics of our inflation index next to the CPI. As I mentioned, there were many months, about six months, where there was a slowdown in reports in our indicator and also, in the CPI. That trend is now reversing. The difference that you see there between the levels in our index and the CPI was caused by some sectors that had unusually high levels of inflation in the CPI data, sectors that we do not rank directly with online data so far. We have produced this augmented inflation index that I am posting here, that will be released soon, that tries to take into account these particular sectors that in the US case has been important things, like accommodations, air fare, used cars, and some services. Now the augmented data increases the level of inflation, but doesn't change the story. It reflects the same thing, a slowdown in the past few months and now, a resurgence of inflation coming in, particularly in the last few weeks, I should say, and that is a worrisome trend. Overall, our index has been showing for the last 12 months, above average levels of inflation in the case of the US and we are going into a period that is normally experiencing higher inflation towards the end of the year, right before we see some sales happening, so that, to some extent, is to be expected. Certainly, we are seeing a change in trends once again and a rise in some of these pressures. One of those elements that seems to have been important all along has been supply disruptions. You may have seen me present some of my research along these lines in the past. PriceStats has the ability to track how the availability of goods online, in the stores that we monitor. We distinguish really between what we call temporary stockouts, which are the stockouts that are advertised or announced by the retailers, like those signs that you see there, from what we call permanent stockouts which are simply the disappearance of many of the goods from the stores. Both of these things have been important during the pandemic and I've analysed it in the paper that is quoted here. I want to give you an update on what is happening when we consider both temporary and permanent stockouts. You have here several countries where we have been doing this for quite a while since the pandemic started. The bolder blue line is the US. We are seeing, this is I guess the good news, in most of these countries, reduction in some of these shortages and stockouts, from relatively very high levels, particularly in the case of the US. A peak that happened in May, things have been improving gradually over time and we're approaching relatively normal levels compared to what we have before the pandemic. Perhaps the only exception that I'm showing you here is Canada where we're still seeing significant shortages in the sectors that we can monitor online. Now it's also true that these shortages come in waves. It was very clear in the case of the US, those could be linked to shipping practices and the fact that some retailers might get a bunch of containers for a while. That seems to improve things, but then we see another wave coming down the road. There are naturally questions on whether this is over or not. We will keep track of this and inform our clients of any developments, but overall, this is potentially some good news in terms of supply disruptions. Now the aggregate numbers hide interesting information about different sectors, and in particular, I want to emphasise even in the US, stockouts are still relatively high for food and electronics. Those are two sectors where we have seen it remain persistently strong. Not surprisingly perhaps, food inflation has been rising and continues to rise in the US. It's becoming a major driver of inflation. You're looking on the left to our inflation index and on the right, a chart that shows you with the red dots, where we lie today relative to the averages we have seen for each one of these months in our 13 years of data. Clearly, food inflation is one of those sectors where we have seen above average levels for quite a while. In great part, I believe can be explained by some of these supply disruptions that proving to be quite persistent. Even though, I will also note that food as a commodity is a major driver of inflation in many other countries as well, as I'll show you in a second. The other thing I want to point out based on my research is that even if the stockouts were to disappear today, let's imagine that happens at some point, also for food and electronics. The price impact or inflation impact remains for quite a while. You're looking at a graph that tries to estimate the impact on inflation of a shock to the stockouts or shortages levels, and that can take a while to dissipate, about 12 weeks in this chart, so basically three months in the end is what we can expect some of these delayed effects of inflation to remain there. Even if the stockouts were to disappear, which is still not exactly the case in all of the sectors. The other factor that has been brought up a lot is the importance of demand. As I have mentioned in past presentations, prices contract abnormal behaviours of sales and promotions as a way to get a sense of whether retailers are experiencing abnormal levels of demand or not. These three charts here are showing you what happens in three different sectors; consumer goods sectors in the US that are greatly affected by sales and promotions. We have clothing, furniture, and electronics. As you can see from these comparisons of the levels of sales to-date, to the levels we have seen in previous years, on a monthly basis here, you can clearly see that there are sectors like furniture and electronics where we're still seeing relatively low levels of promotions and sales. Therefore, we can expect these retailers to be experiencing relatively high demand. I think demand is still an important driver and may become even more so important in the next few months. We will keep an eye, particularly during this sales holiday season that is coming up. That is when these indicators will likely be even more informative, because we tend to see not just the cyclicality or counter-cyclicality of sales, but just a lot of seasonality, so it will be important to keep an eye on what happens with sales during this season. Finally, about the US, I want to emphasise some inflation risks moving forward. In particular, the case of rents is something that is concerning. PriceStats has been collecting data online for rents for quite a while, and we have produced inflation indices that are not incorporated into our main index yet, but will become part of this augmented index that I showed you before. These indices are built based on information that we can collect from available apartments that are currently offered for rent online. That's the blue line that you see there. It's essentially an average rent index for the US. You may have seen other similar indices being produced by companies that specialise in the housing sector. Now, the red line there is what happens with the rent of primary residence in the CPI, an index that in addition to owner-occupied rent becomes a major component, about 30 per cent of the weight of the CPI, so it's very important to keep in mind what will happen to this sector when we're thinking about inflation in the US and in other countries. Now, there's a caveat that I want to point out. You see this big difference and that is obviously, a source of concern, but these indices, like the blue one I'm showing you here produced by PriceStats, being an average of apartments that are available for rent, are subjected to what we call compositional issues. The type of apartments that are available at one point in time may not be exactly the same as others, and that can create some big divergences from an index like the one the CPI produces, which tries to maintain a constant sample of properties. We're not likely to see these big increases as well in the CPI. It will be a more slow adjustment, but I'm just showing you this as areas that there's pressure building up here and certainly, we can expect higher levels of rent inflation trickling into the CPI data in the months to come. It will likely be a major driver of what we will see moving forward. The other big inflation risk that has now become, I believe, a big problem is what's happening with wages. Since the pandemic started, people have been talking about the potential for wages to go up. What is concerning at this point is that the indicators that try to adjust also for compositional effects on wages are the ones that are rising. I'm showing you here a quarterly index produced by the BLS in the US, the employment cost index that tries to control this composition of labour shifts, and like the CES survey that is available on a monthly basis. You can see that the latest numbers are actually suggesting that there's a significant pressure on the cost side, both on wages and benefits, which is concerning and could potentially also lead to much more lasting pressures of inflation moving forward. This is a sector that clearly needs to be monitored more closely, and the data is already showing higher levels of inflation here. It will put certainly pressure on the costs of many of these firms in addition to all the other costs that we're seeing. Now let me move beyond the US and give you a more global perspective. If you look at our global indices, the develop, the emerging markets, and even the Eurozone index, they all have similar trends. There was a slowdown in, I would say the last six months, where many of them are showing signs of, and even higher levels of inflation that we had experienced in the past. A big difference with the US maybe that on a more global scale, there's clearly evidence that food and fuel are now major drivers of overall inflation, and you can see that here in these charts that show you the current levels versus historical levels we have detected for these indices on a global basis. We produce similar indices for developed and emerging markets and the results are very similar on that sense. Now we've been finding higher levels of inflation online relative to the CPIs in many countries. I'm showing you here annual inflation rates, both our indices in orange and the CPIs in blue, just to illustrate how in most of these countries, the CPI trends have already caught up to the numbers we were finding before with online data. In that sense, there's less of a surprise coming up potentially in the CPIs of these countries, even though we're talking about levels of inflation that have been quite high, particularly in some of these online indices that we have been monitoring. Now there are some countries where there could still be surprise and I wanted to highlight some of those. The first one is the UK. I actually made this presentation a few days ago and so, as many of you know, the ONS in the UK announced the latest numbers of inflation and we have seen the CPI pick up and reach that number that I have there, around four, slightly over four per cent. It may be less of a surprise today and as you probably remove it from this particular slide, but there are still some others where there is a potential for the CPIs still to go up and catch up to our online numbers. Places like South Africa, we have seen similar trends, but higher levels of inflation than what the CPI suggest. Even more strikingly is what has been happening in Brazil and Turkey, two of our largest developing countries, where we have seen inflation rising steadily since the beginning of the crisis, and the CPI still has some way to adjust. I want to emphasise two that I find particularly interesting, one is the case of Japan. Obviously, the level is not that dramatic relative to other countries, but you can see a big difference between the CPI still not reflecting these higher levels of inflation we have been finding for quite a while there. The other news is China. China, we do not produce an aggregate inflation index, as many of you know, but we produce a supermarket and fresh food index. For much of the pandemic, those were actually in deflation territory. The last few months, we are seeing those come up, so we may see some pressure building up in terms of prices in China as well, based on this comparison to the online data. Now what could be driving some of these effects beyond just food and energy? I want to emphasise three countries where we think tradeable inflationary pressures could be playing a major role in the months to come. Those are Brazil, Argentina, and Japan. Those, if you look at our PPP indices, you can see that that's where a basket of goods compared to the US is too cheap today based on these Purchasing Power Parity indices that we create. I want to emphasise this in particular for the case of Brazil. Our indices on the PPP side try to capture the cost of a basket of goods over time, which is what you have on the top left chart over there. The bottom chart shows you the components of these, the exchange rate, and what happens with relative prices. As you can see, what happened during COVID is that the depreciation lowered significantly the relative cost of tradeable goods in Brazil. We have seen relative prices compensate for these during much of the pandemic, but there's still some pressure there and some alternative or potential for relative prices to continue going up, the cost of the basket is still 19 per cent below the normal historical levels. I believe this will continue to put pressure, in the case of Brazil, in some of the other countries I have mentioned. Now it will certainly become something to keep an eye on if the developed countries start racing rates, we should see a round of depreciation in many emerging countries and I think these indices will become very important for us to understand how quickly this exchange rate pass-through is likely to affect some of the inflation we will see in those countries. Let me summarise then some of the takeaways from my presentation. Inflation is accelerating again. I am much more concerned when I look at these numbers than what I was three months ago, when we were seeing some stability at high levels, but relatively stable over time. Now the trends are increasing. Some countries to watch in particular are US, Japan, China, Brazil, and Turkey. I think those is where you will find most interesting trends in our numbers. Food and energy are now main drivers of inflation. We can think of those as potentially transitory forces, but will certainly continue to put pressure in the next few months. There are a few highlights of good news, in terms of stockouts. They have fallen over time in our data. They just remain persistently high in particular sectors, like food and electronics, and we're seeing with the sales data, some below seasonal average still there, which suggests demand and pent-up demand in particular may be playing a significant role still at this stage of this crisis. If you want to think forward into 2022 for the US, we have to keep an eye on rents that we will incorporate into our data and keep informing you about, and then also what happens with wage inflation in the official data is something worth keeping an eye on. In other countries, I believe in the later stage of this crisis, the importance of exchange rate pass-through will certainly be worth exploring. Thank you very much and I'm looking forward to the questions.Great. Well, thank you, Alberto. Very insightful as always. Now we'll go into the Q&A and we'll start with some of the questions that we've already received. We've received a nice number of questions, but certainly please continue to ask questions via the sidebar. Great, so maybe just to add on and build upon some of your comments at the end about thinking ahead to 2022. There's a couple of questions here about what we should expect going forward. One question is, do you see inflation normalising in the future? Then I think another related question would be, under what circumstances could you see us in a scenario that would look more like '70s style inflation, which might be a little bit more concerning?Great questions. The question about normalisation, how long this will take are always very hard to answer because no one can really predict the future, but let me tell you what I think we should be looking at. How long this inflation will persist depends a lot on two things; first, what happens to shocks that we are experiencing and second, how policy reacts to this. On the shock side, the research we've been doing suggests that things like supply disruptions are clearly playing an important role and we can expect some of those to normalise eventually. All these bottlenecks in ports, all these disruptions that we may be having potentially in the labour market, those are things that we can expect to normalise at some point. How long? That's a very difficult question to answer, because we have never experienced a shock like this. It's very hard to compare with other previous events, but it's certainly likely that we are going to experience still many problems in the next few months, for sure. Our supply side indicators, our stockout indicators are showing improvements overall, but there's some sectors like I showed you today where that will continue playing a role. As I said, even if they disappear today, we're going to get more inflation. There are other shocks that are coming on the commodity side, and food and fuel are likely going to put upward pressure in the next few months. Some of that may be reversing itself in 2022, but it's unclear how long those pressures will last. Finally, as I said, it's extremely important for this question to know what will happen with policy, how policymakers will react and in particular, central banks. I think central banks are going to feel the pressure to start increasing rates much sooner than they were anticipating, and I think they should in fact start showing some signs that they're more concerned about this. If they do, if they show that they're worried about inflation, that will help pull down some of those expectations that may be creeping in through wages and other areas, and could potentially be far more damaging than what we have seen so far. I think keep in mind, the shocks and keep in mind also, how policy reacts. That's going to be very important moving forward.Great. In terms of drivers, you mentioned energy and food as key drivers of current inflation trends. There's a question here around your thoughts on estimate and core inflation, and I guess maybe something I'd add on to that is I know previously, you had research around the pass-through effects of fuel prices and food prices. Do you think any of those pass-through effects are inflating core inflation numbers?Yes, in fact, fuel, one of the problems with fuel as a driver of inflation is that it is so important for the cost of so many things that we produce that are core goods or core services. My research in the past has looked at how quick the pass-through has been and how it has changed over time. In particular, some of you may remember back a couple of years ago, I emphasised that when you look at the online markets, you find that the extreme competition and flexibility of prices is making many retailers pass on more of their costs or faster, some of their costs into their retail prices. Certainly, one of the examples I used was a fuel pass-through and I showed that over the last ten years that we have been collecting data, fuel pass-through had become quite fast and into the prices, and I'm not just talking about the price of fuel in the CPI. I'm talking about how quickly this is passed on into the prices of other goods, that many of them are core goods. It has become even more worrisome with the COVID crisis, because a lot of things have moved online, compared to when I did this research back in 2018. The level of spending online across many categories of goods has increased and to that extent, we can expect even higher pass-through. That's why fuel inflation or commodity price inflation, in particular, is also something we should keep an eye on, even if we have this mentality that maybe core is all that matters. There's going to be relatively quick pass-through into core prices from these commodity shocks, for sure, in the next few months.Last year, you did some work around consumption baskets and how distortions in consumption baskets were distorting the official inflation numbers. Is there any update on that? Do you think that's still distorting any of the numbers and if so, in what direction?Yes, so in 2021, it's making inflation look a bit higher than what it would be if we took into account, the changes in the inflation basket over time, but it doesn't change the story. It just changes the level that we're seeing of it, but still inflation, with a COVID-adjusted basket, is above four per cent using CPI data alone, and the trend is worsening over time. It doesn't really change the story about what will happen moving forward and how dynamics have changed. It maybe affected certainly our perception on what was important at different points in times during the crisis, but not moving forward.Now that you can capture rent, which is a really exciting augmentation to your methodology, how do you think the trend in rent that you showed earlier, how do you think that will translate into owner-occupied inflation?Owner-occupied housing, one of the main drivers, if you look historically at the inflation rate there, has to go with utilities, and I think that's what we're first going to see driving some of that higher levels of inflation in owner-occupied housing. Overall, both for owner-occupied housing and rents of primary residence, which are the two housing components in the CPI, I think both of them are likely going to experience higher inflation moving forward. Again, how long will that remain in place will greatly depend on what happens with the housing market. Policy will have an impact on that, for sure, if rates start rising, we're going to see potentially a cooldown of the housing market and that should affect, with a lag, some of these indices, but it's certainly an area of concern. One of the interesting things, if you look at the evolution of this crisis, is how different sources of inflation have been shifting, so supply disruptions were clearly important at the beginning, coupled suddenly with a rise in demand of all the re-opening sectors. I think the housing effect is what we're going to see next mattering and potentially, for other countries down the road, we're going to see all these issues with exchange rates, if we start seeing rates rising only in developed markets. There are different sources of inflation affecting us all along. On the aggregate, they're all making inflation become higher, so it's tremendously important now for the political side to react to some of these higher numbers.Do you think, at least in the US, tariffs are also contributing to some of the inflation that we're seeing? Is that getting passed through to consumers?I did some work in the past on tariff pass-through and we found that in particular with the trade war, we found in 2019 that very little of those extra tariffs were being actually passed on to consumers, and the reason was that many retailers and companies appeared to think that the trade war itself was a temporary factor. We speculated back then that as the trade war become more permanent, they were going to be more willing to pass that on. Now before that even happened, we get hit by COVID and many retailers are experiencing these other additional costs, so I certainly think this has all piled up and made many of them more willing to finally raise prices and reflect these additional costs into their product prices. It's a factor that's certainly added into this story. I don't think it's going to be a major factor moving forward. All these concerns about the world becoming even more protectionist with COVID are not as concerning, let's say, as they were at the beginning of the crisis. I think we have other potentially more important sources of inflation moving forward.Great, and I guess in our last ten seconds or so here, I'm sure everyone's excited to see some of the new series that you're producing, so when can people expect to see some of those and where?We'll keep you updated. I'm not allowed to say specific dates, because I always get them wrong, but it will be very soon. The augmented index is ready and we'll be releasing that very soon.Great. Well, thank you so much, Alberto. I guess time will tell how inflation plays out, but this offers a lot of really interesting and helpful perspectives, so thank you so much.