Dr. Kieran McQuinn:

That is why we included a graph with our opening statement. We wanted to show that there was disinflation or price falls last year for a number of goods and services. The base effects idea concerns price levels versus growth rates. We always focus on the growth rate when we talk about inflation but if looking at the price levels we see that even if we have a strong increase in prices this year, the level may not be much different from where the long-term price level would be for those goods and services. The fact that there was a fall in prices last year means that even if there is a small increase in prices in those goods and services this year, it can show up a big increase in inflation and the price change. In the analysis that has been done, more internationally than domestically, to break down the current components of inflation, a certain element of it is the base effect and then the supply chains are another element. That is the work I referred to and the Bank for International Settlements has done a lot of work trying to break out the impact of the supply chain disruptions on inflation. The energy cost increases then come in on top of that. Those are the three major components in an international context but we have them in Ireland as well. The housing element mainly comes through in higher rents on the cost side.