Mr. Gabriel Makhlouf:

Apologies to the rest of the committee because I am going to repeat some of the stuff that I said earlier. Inflation right now, today, is being driven by three things. It is being driven by what we call base effect, which is just the statistical phenomenon of the way inflation is measured looking back 12 months. The reality is that 12 months ago prices fell everywhere as we were in the middle of the pandemic. We are now coming out of the pandemic and out of restrictions. That measurement process is feeding into the calculation of a number that we are seeing.

Second, inflation right now is the result of supply chain blockages. With the restrictions having been lifted, we have had a significant increase in demand and supply has struggled to meet that increased demand. This is partly because of very practical things as I mentioned earlier. Container ships are in the wrong places to transport goods from Asia here, for example. This is also partly because of the sheer scale of demand on the part of consumers.

Finally, inflation right now is being driven by an increase in energy prices. All of these are affecting the whole world to some extent or another. Over the next 12 months we see those pressures dissipating. So the base effects or measurement point will probably be the first to start to be seen because it will fall out of the calculation. Hopefully, we expect supply chains to get back to some sort of normality and to certainly work in a way that meets demand. We see a consequent impact as well on energy prices.

Essentially, we see current inflation beginning to dissipate from the start of next year and slowly be seen throughout 2022. If supply chains do not get repaired, for example, then obviously that prevents normality and that may have an impact on how long inflation persists. Certainly, it is not going to disappear overnight.