Mr. Vasileios Madouros:

We were talking about the balance of demand and supply factors in relation to support. If one looks at the last two to three years, there has been a combination of supply and demand factors. Obviously, we had these enormous supply shocks, first related to the Covid-19 pandemic and the supply chain issues that came after that, and then those related to energy and Russia's invasion of Ukraine. We have also had a big increase in demand. For example, when the economy started reopening, we had this surge in demand for certain types of services that people could not have before, like hotels, restaurants and travel. We have seen elements of that. If one looks at some of the recent data published by the Central Statistics Office, CSO, it rewrote history to some extent and told us that if one looks at consumption, it is now about 3% to 4% higher in aggregate than we thought it was previously. There has been a demand and supply element overall.

Recently, we also did some piece of analysis to try to decompose what has been driving inflation, and the demand and supply factors. There one obviously sees, when one looks at headline inflation, for example, a big supply limit because of energy prices. The fall we have seen in headline inflation is because of the unwinding of some of these supply shocks. However, one also sees a persistent a demand component. If one looks at services inflation, which is more domestically generated, first, one sees it being more persistent because it has not fallen as much and, second, there is a material demand element to it.

Of course, we were also talking about supports. As the Governor said, when we had these extraordinary shocks, clearly there was some part of the population that was particularly vulnerable. Supports have been necessary to support those people in these very challenging conditions. Our advice has been temporary, targeted and tailored as well. At this stage, it is definitely targeted, and I am also thinking about sustainably funded as well.