 Hello everyone. You're all very welcome to our webinar this evening. I'm going to let everybody in there so that we have a chance to make sure that everyone can get in before we get ready to go. It's one of the features of Zoom webinar that everybody just needs a chance to get in before we get started. So I hope you're all warm. We're everywhere this evening. I cycled home this evening and it was freezing on the way. So I hope wherever you are that you're warm and cozy. Okay, and it looks like we have everybody here now I think. Sorry, I see the camera just picked up there. Okay, I think we are good to go. So first of all, hello everybody. You're all very welcome to this evening's positive economics webinar. And when it came to choosing the title for this one, it wasn't very difficult. It is the story of 2022, namely inflation. No matter where you go, whether it's the World Economic Forum, whether it's the conversation that's had. And Annie Street corner, whether it is government policy, whether it is wage negotiations, whether it is the Christmas bonus, no matter what we're talking about these days, a lot of it comes back to inflation. So what I thought would be a good idea this evening is to take us through a real deep dive into it and to get an understanding of everything to do with what's going on in inflation in general. I'm going to share my screen in a moment and I'll walk you through key things that I'm going to cover today. But before I do that, just to give you a broad outline. What I'm going to focus on is first of all looking at where inflation comes from, and then looking at Irish inflation in particular. So what is driving Irish price increases. And what does that mean in reality, in real terms when it comes to your shopping bill, whether it comes to your gas or electricity bill, whether it comes to the cost of education, all those sorts of things. What does this really mean, as an old saying would say in pounds, shillings and pens or euros and cents today. But then what I'm going to do is I'm going to compare Irish inflation with the world. So I'll then show you what's going on with the major countries around the world and to show you how Ireland compares. But also, not just how inflation may be dealt with in Ireland, but also how are different countries handling it throughout as well. And then the last thing I'm going to do is look at inflation expectations going into the future. So where do we expect this to go? Where do we expect this to go? Has inflation peaked? Are we expecting further increases? And of course, how are governments, central banks and other parties handling this as well? So that's broadly speaking, what we will be doing over the next under an hour. And before we get to that, please do, of course, feel free to put your questions into the Q&A pod. I see them there. I'll answer as many as I can in the time that I have. And also, of course, if you'd like to chat, you can feel free to pop it in there as well. As you know, this will be recorded and it is being recorded and will be available afterwards. So everybody who has registered here will get the follow up email. And for those of you who have told us that you would like to be added to our mailing list, you will also be the first to hear about the next positive economics webinar. Okay, so before we get to that point, what I just wanted to do is, I just want to talk about in positive economics, I just want to talk about what it's like to actually write a chapter to do with the price level. So in the textbook itself, it is, we talk about inflation, particularly under chapter 14 monetary policy in the price level. Now, when you're writing a chapter around inflation at the time that the three of us were as authors, inflation in Ireland, like it wasn't there. It simply wasn't there. We were looking at inflation from the point of view of course, as lots of people know, that the objective of the European Central Bank is across the Euro level. Or across the Euro area to keep the price level growth at or below 2%. That is the objective of the ECB. Now, when we were writing this book, and in fact, when we were writing the book before it, in both cases, inflation was really, really, really low and had been for a decade. If you think about it, the Euro was only 20 years old, and therefore monetary policy to be created and implemented right across the Eurozone is of course only 20 years old as well. So for the past roundabout, since roundabout 2010, the ECB has been dealing with extremely low inflation. And they use the monetary policy tools again we mentioned in here around lowering interest rates and increasing money supply and doing what they could around the exchange rate and a variety of subset of tools throughout. And then things changed last year, things really changed last year, because last year inflation started to be seen in various different developed economies around the world. And the workers, like from the Fed in the US, started talking about this transitory form of inflation, which means it was only going to be here for a little while. We were going to see transitory inflation and that had happened as a result of a really bizarre economic situation because of COVID, bizarre supply chain issues that had happened because factories couldn't open and it was a Suez canal issue when all sorts of things. And also of course just remember, the margin of propensity to consume is particularly high when you are dealing with people who have got stretched economic resources, namely income. So, as the government was providing a lot of support into the fiscal economy into people's pockets directly. Again, people were spending the money, as they were getting it and in some cases of course they were also saving it, and then you had a backlog of money that was going to reach the economy as soon as lockdowns were lifted. All these reasons were going to lead to transitory inflation. And then the word transitory started to be dropped from the conversation as we got to the end of last year, actually was like, well, maybe it's not transitory after all. And then of course, the really big thing happened at the beginning of this year, and that was the invasion into Ukraine. And then, then things started changing completely because then it wasn't just about the price of generally goods and services rising. Instead, then it became a real, real laser focus on energy. And then from there, all of 2022 we have been talking about the rise of gas prices, the rise of oil prices, and I'm going to show you the real figures around those. Then we were also focusing on the increase in the price of food. And I was speaking for a group in May, people who are working in the banking sector. And of course, like I say, inflation as an economist, unless you were talking about inflation this year, you weren't talking about anything relevant. But at the time, I was saying, in particular, what was going to have to happen next was going to have to be a conversation about wages. But if you're going to have a rise in the cost of living, well, then that's going to be fed into wage negotiations, whether it's at an industrial level through a trade union, whether it's one to one conversation in small businesses, whether it's overall conversations around this with larger companies, whether it's government is no matter what wages was going to have to be looked at from the point of view of the cost of living. And more and more, of course, we're seeing those conversations now making it into the news. You're hearing it now coming up again in how Christmas bonuses are being administered. And one of the things the government did in that regard is, I have my own company. I also have staff. And last year, I could give any member of staff a 500 euro tax free voucher in Ireland. So I could have bought, which we did, but buying a 500 euro voucher for a staff member and then they could get that tax free. This year, for example, the government has lifted that tax free level up to a thousand euro. So now a company can buy a thousand euro voucher, for example, for their staff to be given out. So that's a way that's obviously a short term. Once off at measure that can happen from between an employer and an employee, obviously what happens with wages, etc happens thereafter, but more and more we're seeing that being fed into the conversation now as well. So on that note, I am now going to share my screen. And I am going to make sure first of all that my slides are open. Okay, so what I'm going to start off with talking about is where does inflation come from? What is the Irish inflation rate at the moment? What is driving Irish inflation? How does Ireland compare to the rest of the world? What are different countries doing about inflation and what are inflation expectations in the future? So let's take it from the top. Where does it come from? But in here, we talk about demand, cost push and demand pull. And for anybody that's looking at the book there directly, I had come up with a picture brief at that stage where I felt a good analogy for thinking about this is when you pull it over and push it over. So I'm going to take a different picture here tonight. This one comes from in Bestopedia. And if I just look at the middle one first. So we've got cost push inflation. So this is where let's say that I have, I've got a phone here in front of me. When I look at that phone, of course it's made up of a range of things. It's made up of a range of bits and pieces. It's made up of software that has been put onto it. It's made up of hardware. And of course you've got the packaging around it. If you're going to sell it to me, you have the person in the shop who's going to be telling me about its features and dealing with my questions, etc. And then after that, also a charger comes with it. Okay, so let's just say they're all the things to do with a phone. However, if the things in the phone go up at price, well then the company selling me the phone is going to either have to do one of two things. Or those cost increases. If they do that will affect the profit or else pass it on to me. In other words, push up the prices thereafter. So what would happen in that regard is I feel the inflation. The inflation first of all happens as the company is making the phone, but since the price rises, then I'm also experiencing inflation. So that's cost, cost push. That means because cost going up, well then the price of good goes up, which means that I feel the increase in the price, namely inflation. But let's go over here to demand pull. So demand pull is actually where I would more so where I'm going to more so focus our, our energy tonight, energy being upon actually based on what we're going to be talking about. And that is, imagine that there's X amount of things available. So there's a fixed amount of things available, but more and more and more and more people want those. Now I'm somebody that was only delighted to go and see Garth Brooks as a musician when he came to Ireland a couple of weeks ago and was playing in Croke Park so I was one of those people who was only delighted to go down to the concert down in Croke Park. However, if there was far more people wanted to go and see Garth Brooks and actually spaces available. Well then, there may have been an increase in the price. Now at the time, Garth Brooks actually maintained the price of those concert tickets, the same as what was supposed to happen in 2014. So they were fixed. But let's just say instead that the concert was totally sold out, and somebody wanted to take it and let's say they were looking at some sort of informal market maybe it was eBay or another market apartment. Then you can see the prices going up. I was in Croke Park again last Sunday for the all Ireland or the Lenshire senior harlingen football club finals. I have been in Croke Park and many occasions over the past couple of years, and then the bigger the occasion so if it goes to the quarter final, then the semi final and the final itself the prices of tickets go up because more and more people want to buy them. However, let's just think about that in the context of the moment of energy. When you look at where we're getting our energy something has changed significantly in the past year. And I want to draw your attention to one particular statistic that was mentioned by Ursula van der Leyen in the state of the Union address 2022. I am going to show you what that is right now. This is the state of the Union address, which came from Ursula van der Leyen, like I say, and I'm just going to control F, I'm going to look for the number nine percent. She said here, last year, Russian gas accounted for 40% of our gas imports. Today, it's down to 9% of pipeline gas. So the thing is, is that what the amount that is actually available to us as a result of what's happened in Ukraine has reduced. Has the demand for gas or oil decreased? Well, back when COVID was at the very beginning, there was an expectation that there would be a global slowdown in demand. It was such a shock to the economy. And before we started seeing governments back businesses or governments enable people to maintain employment while companies were shut down, etc. At that stage, it was a really big fear that there was going to be a massive global recession, super quick and for a long time. And that didn't materialize. So as a result, demand has actually remained the same. What we're seeing is a demand full inflation. But actually, it's not because demand necessarily has been increased, like lots more people on Seagate Brooks or lots more people want to go to Cork Park for a GMA match. Is that instead it's because the amount that we're actually importing from Russia has dramatically decreased. And of course, you can't just switch on green energy resources super quick. You can't just say, okay, Joe will do now, we'll build a load of solar panels all over the place, or we'll build a load of wind farms out in the Atlantic. Because they are planning all of these things to happen. And we can talk about green energy production in another day. But the point is, is that demand full inflation is what's really driving the boss here. Because we've got a big demand, but our access to that energy has changed because of what we've seen in the European Union continent this year. And of course, the other one is the one that I started to allude to. And that is that now what we're going to start seeing is built in inflation, and that is when prices rise, what then the expectation for wages rise as well. So what happens then is that as people are earning more than they can fuel that. And again, that's another point, then they can fuel that. Now of course, that doesn't mean to say that every employer will give wage increases. It doesn't mean that when a trade union is negotiating a wage increase that that can actually that that agreement will be met in both sides. We can't just assume that these will happen, and it will be smooth. But the point is, is that that element of wages responding to cost price increases has to feed through to the economy. And if it doesn't, you may say it doesn't have to. Okay, no, you're right. It doesn't have to. Well, what happens is, is that really comes fall, is that inflation adjusted incomes fall, and then we have a separate knock on effect. And that is where people can't afford to buy as much as they used to their so the marginal propensity to consume remains high with the amount of money that they can actually spend changes. And then that has a knock on effect. First of all, consumer discretionary. Those cyclical elements of the economy starts support that could be hospitality that could be more expensive items, whether they might be cars, whether again going back to holidays and hospitality, could be clothes, could be food at a higher level and all those sorts of things. And that then continues. And then it starts and then it starts to affect other areas of the economy and we all know what can happen from there. Then we are dealing with a downward spiral. So that's why, as a result of that, when it comes to wages, this is where this is the public and the private sector address this from the point of view of wages. And one way in which inflation is actually not tackled as in slowed down, but actually enabling people to keep up with it. So that's how inflation works at a theoretical level, but let's now look at the Irish inflation level. I got this from the latest CSO press release and it basically summarizes where we're at at the moment. The lower price index rose by 9.2% between October 2021 and October 2022 up from an annual increase of 8.2% in the 12 months to September 2022. So therefore we can see that as regards the latest figures in October. By the way, later on in the session, I'm going to talk to you about the difference between the CPI and the harmonized rate of inflation as well. I just want to explain the difference between the two because that will come up again and again. But I thought the second statistic here is quite interesting. This is the 13th straight month where annual increases of the consumer price index has been at least 5%. So what is not here, what I haven't said is this is the 13th straight month of inflation. I haven't said that. I said of greater, at least 5%. So if I was to turn that into real figures. And in the next slide I'm going to talk to you about pounds, shillings and pens. What this actually means in reality in one's pocket as they're shopping. What this means is that at any stage over the past 13 months. This is going back to September 2021. At any stage over that timeframe. When you would compare to a month before or sorry a year before the same month the year before, whatever cost 100 euros then costs 105 now. But because this is the consumer price index, this refers to a basket of goods. As I promised, and as the title suggests, we are going to do a deep dive. So I'm going to show you exactly what has been driving those increases and also what has been decreasing in price as well. So I thought this was a particularly interesting and real life scenario. And this is the national average price. This comes also from the CSO. And they looked at like the national average price for bread right so 800 gram slice pan was up 20% was up 26 cents. And now I actually should make this slide a easier to read. So let me go and do that because I don't want us now missing out on anything. So, I'm going to get this this is designed happening here now on the fly board. Get this and I'm going to crop it and I'm going to pull it out here to the right. If that ever happens you by the way that's all you need to do is just change the crop. Okay. And the other thing that I need to do is increase the size, change the crop again sorry you're getting a digital skills lesson here now as well as everything else. I'm going to leave that there. And now moved to the top. Okay. Much better, like I say, digital skills as well as everything else tonight. Okay. So the national average price for bread was up 26 cents in the year to October 2022 while the same size brown slice pan was up 24 cents and in the year. 500 grams increased 28 cents while the average price of two and a half kilogram of potatoes decreased by six full fat milk and so on you can see from there. So there was genuinely differences in in those stable items. And they are not necessarily items that households can compromise on or get to get fewer of obviously if you want to feed your family. Similarly when you look at a can of lager when you look at cider when you look at price of a pint when you look at full fat milk etc. Now all of the top three. All of those refer to just the changes that are happening on a price by price basis in reality. And this is the thing I will say to all of you, because I know we've got both students and teachers here tonight is that as as a student of this of this area. I'm going to tell you something that a lot of people say to economists is that a lot of the time that kind of speaking like high level figures. We talked about growth in economy and like the Irish economy is hundreds of billions, or we talk about full employment, two and a half million people in employment. Are we talk about the impact they have the cost of child benefit to the to the government, or we talk about a change in pension age and what that's going to do over a period of time. As economists, we talking big figures, but in reality, economics affects one person after another. And it's really important when you're talking to people about the economy is that you understand where we're look where one person is looking at their economy. And as you know, I have the name of the positive economist and that's not to say that I always just talk about stuff often people think that doesn't mean that at all. Instead I always try to look through the lens of a person, a business, a sector, a organization through their world, and simply look at what they can do with the economic situation that we're looking at so that they can improve it. So when it comes to understanding inflation, it is important to look at an individual element, an individual cost of something that everybody buys like our most households might buy, like loaf of bread, like a packet of spaghetti etc. So now that we've looked at the more granular level in pounds, shillings and pens or again, euros and cents. Let's now move up the level and look at this on an overall basis, because there's two slides I have here, and this is just a summary of the latest CSO release CSO being central statistics office. Now it's a pretty long release and I just want to speak out a couple of things. Number one, we have got the highest rate inflation since June 1984. I'll get you in in a secret. I wasn't born then. I wasn't even born in June 1984. In other words, I am seeing higher inflation up in any stage of my lifetime, even the earlier parts when I have say I wasn't a student of economics. So this is the highest rate of inflation. In June 1984, when inflation was 9.7% and it follows an increase of 8.2% in the year to September 2022 and of course then you can see their prices have been rising on an annual basis in April 2021. Remember when we were hearing about transitory inflation and now an annual inflation of 5% or more recorded in each month since October 2021. I should say now, actually, because I had said there was since September, October is 13 months because of course you have the two October so that would have been 13 months. So we are like, this is history bearing out the principles and I remember one day walking into a meeting in a company in Dublin. And as I walked in the front page of the newspaper of the Financial Times and I'm going to show you something on the FT here in a little while. But the front page screened this big inflation, this big headline that said inflation in the UK is now down, down, is now down to 10%. And I just said, oh my God, that is like to think that inflation was down to double digit figures still and that that was being hailed as okay maybe it's turning around. So there's one for you is that we're seeing the highest rate of inflation in 38 years. And there you go, you have the numbers. So what's driving it. Let's actually look because we looked at cost push, we looked at demand poll, and then there's built in, but and there's also one other element that I want to talk to you about as well, but we'll get to that. So where's it coming from. Okay, so the most significant increases in the year we're seeing in housing, water, electricity, gas, and other fuels that was up by 27.8%. And then there's food and non alcoholic beverages, which rose by 10.6%. So increase energy costs. Now what's that called cost push inflation. In the yearly increase in housing, water, electricity, gas, and other fuels is up 71% in electricity, 71%. So in reality, from my point of view, let's say as a business, from my point of view, if I am experiencing higher costs of electricity, gas heating, or any of those energy sources. I'm experiencing those. And therefore, I then, I'm going to have to go to my customers and either increase prices or alternatively I need to absorb it into my profit margin. If let's have having super normal profit, this is going to affect it. If it's normal profit, it's going to affect it. However, who's providing me with the electricity. Well, it's going to be an electricity provider. So one of the reasons they're experiencing demand is because they're trying to find more electricity, and the source of where they're getting it has changed as a result of what I just showed you there, or slip and relay. So our experience of inflation is the same, which is higher costs. But the reason for our inflation, maybe different. So you can see here, gas is up 93.3%. That is unbelievable. That's nearly double. So solid fuels or home heating oil is up 65.4%. And then solid fuels up 47% in the year. So then the annual changes in food and non-alcoholic beverages costs reflect a rise in prices across a range of products. Fresh old milk showed that already. Butter, 19.3%, eggs, 17% and bread, 16%. So is it all, is everything increasing all the time? Okay. Now, down here that I want to bring you the third point, which is there was a decrease in education minus 6% in the month to September 2022. But of course, as an economist, it's really important to curious mind. So you wouldn't stop there, you'd say, okay, but where's that coming from? Like, what is the cost of education? Because I'm sure a lot of people might say, well, the cost of books is going to cost of pens, paper might have gone up, cost of public transport to get people to school or college has gone up. Actually, it is due to a reduction in costs, associating with participating in third level education. So therefore people in secondary school, primary school, or play school may not be seeing this. It's more so related to the costs associated with participating in third level education, particularly driven by fees. The second slide that I wanted to show you from that longer press release is this. Here is where they actually point out where this is driven by. So housing, water, et cetera, roles mainly due to an increase in the cost of electricity, gas, et cetera, and market interest repayments. Now, can I just draw your attention to this here? Market interest repayments. I want to draw your attention to that for two reasons. Number one is it's going to appear on the next slide as you're going to see when we get on to the next slide. But the other reason that I wanted to remind you of this is what we're going to look at in a little while is how central banks are handling inflation. And one of the things that central banks are doing is raising interest rates. If you increase interest rates, think about the knock-on effects of that. If you increase interest rates, well, then you're increasing the cost of borrowing. And why would people borrow money? Well, one of the key reasons is to pay for a house. That's called a market. So the thing is, is that increasing interest rates in the short term is itself inflationary, even though it's due, it's supposed to have the opposite effect. I'll explain in a little while why interest rates go up in order to deal with this. But in the short term, if you increase interest rates, you're increasing the cost of repaying debt. If you have a variable mortgage, if you have a variable mortgage, well, then as a result, you have to be a higher amount on your mortgage to repay and to service that debt, which itself is inflationary. You may say, well, that doesn't make sense. Like, why would central banks do something to increase inflation when inflation is already high? We'll talk about that. Second one here, transport, of course, it's due, it's knock-on effect of the other one, due to a rise in the price for cars, diesel, petrol, etc. As well as, of course, public transport. So what does the government do in this situation? Well, what it tries to do or seeks to do is to then intervene in the price of public transport and then subsidize some of them. I got on Dublin boss the other day, and I was going out to see my husband's cousin and his wife, and as I got on the boss, I was just Googling, I was going on to Google Maps to see exactly where I needed to get from A to B, and I also, just out of pure interest, was looking at the price. And the price, I could see, was actually lower than AI had thought and beaten when I had been on a boss before that in a similar scenario. So of course that is because the government is intervening here in order to deal with public transport, and that is a fiscal mechanism then, and it's going into a monetary policy mechanism, a fiscal mechanism, is one that is to do with taxes and spending. So then we have here food and non-alcoholic beverages rose due to higher prices, and again we've already had a look at those. The ones that we didn't mention were cereals and vegetables. Now, if you want an even deeper life than what I'm going to do with you. If you go on to this latest CSO release, there are tables for every single element of inflation, and you can see exactly where the biggest ones are coming from. I don't know if I'm here for you, but it's a good exercise just to go in and see exactly where it's been driven from. Restaurants and hotels increased mainly due to increased prices for alcoholic drinks and food consumed in licensed premises, restaurants, cafes, and an increase in the cost of hotel accommodation. Also of course, as you're going to see an increase in wages for hospitality staff, that of course too will then enable those hospitality staff to handle the inflation they themselves are experiencing. Of course, the increased cost of wages will then feed back into the inflation for the hotel. Education decreased primarily as ever due to reduction in costs associated with participating in third level education, as we've already discussed. And then finally, miscellaneous goods and services fell mainly due to reduction in prices for motor insurance premiums, that's another thing that's going to come up again pretty soon. Health insurance premiums and jewellery, clocks and watches, and this decrease was partially offset by an increase in prices and articles. Our products for personal care, hairdressing salons, personal grooming establishments, like getting maids done, etc. and house insurance premiums. Just remember again, house insurance premiums, think about that. What's increasing? Back up here, the price of house. Or if the value of your house goes up, well then price that you're ensuring it far would go up and therefore of course, then that would have a further knock on effect. Now, let's move on then from there, but I do want to point out one thing is that if you was going to stop sharing here for a moment. If you take a look at that CSO release. It constantly shows you one particular graph. Yeah, here we go. And this isn't I have got this just on the screen where we don't have all the text and everything that accompanies it so if you go to the full release that's what I've summarized for you but just look over here. Now, you see here we have the CPI and the HICP. What's the difference between the two. So before we get to that, let's just take a look at graph of inflation in Ireland, October 2021, which of course is 13 months when you take into consideration, the fact that we have two October is that all throughout this time frame as you can see, annual inflation was over 5%. And therefore we can see that the CPI is this one is this line here. So it's the blue line. I consider that blue anyway, and blue line there. And the latest figure that is out there is 9.2%, which is of course higher than what it was in September at 8.2. However, what is the HICP. What is that. Now again, the CSO has a as an explanation on that but I'd rather just pick out two key things and I want to show you myself. Basically, the CPI is the Irish official Irish measure of inflation in Ireland, but the HICP is the harmonized one. And what this enables us to do as economists is compare inflation rates between member states within the EU. So taking the Irish measure of inflation and comparing it to the Dutch one, Spanish one, French one, Maltese one, Lithuanian one, or wherever it might be, you wouldn't do that. Because then you're not comparing like for like, so then what the EU did is that in 1996, it had agreed that it was going to launch then a harmonized one so that then we could take Irish and compare it to Dutch because the Netherlands is in the EU, take the Irish and compare it to French because the French one is in the EU, etc. And yesterday was Monday. So yesterday morning, as I was driving into where I was where I had my first event yesterday. And as I was driving in I was listening to the conversation about that the Irish Republic was formed of course 1922 which we know. All of the legal agreements and everything was happening was happening around about this time. So it's interesting of course that when you create a new country, ultimately, which is what was done in 1922, you have to create a set of economic indicators in it as well. So the first efficient CPI for the state was actually compiled in March 1922, whereas the HICP was launched in 1996, long after we had joined the EU. But what I particularly wanted to show you is two things that I mentioned to watch out for earlier on. There's a couple of things that aren't included in the harmonized index and one of those is market interest. Remember what I mentioned earlier is that mortgage interest is of course interest on the market. It is a cost of borrowing for a mortgage. So if interest rates go up, mortgage interest goes up. And of course at the moment. Now when I say at the moment as has happened for the past 20 years, being at the moment, our monetary policy and our interest rate is driven by the ECB rate. But the other one down here is house insurance. Whether it is the contents or whether it's the house insurance itself of the actual house is distinctive what's in it, they're both in there to car insurance tax motor tax as well. Whether it's for the car, or whether it's for a motorbike, I just paid my dad's yesterday. God, yesterday was an eventful day, wasn't it? I just paid dad's tax yesterday. And again, I have noticed that it too respectively had gone up, but that will not be that will not be reviewed or taken into consideration in HICP, whereas instead in the CPI it would. So just a couple of couple of distinctions fundamentally the reason that there are two is one is to look at the official measure of inflation in Ireland, and to compare us to other countries in the EU, then we have the HICP. And then you can compare like for like, and in order to do that, then certain things are excluded one of the big market interest and water tax and a variety of others. Okay, so moving on now from there. Now I want to go from now that we've looked at where inflation comes from. What is the Irish inflation right moment and what is driving Irish inflation. Now let's compare Ireland to the rest of the world. So what I'm going to do is I'm going to this time bring you over to the FT tracker and not going to need to minimize this in order to go to that I'm going to bring you over here to the FT tracker. So the FT tracker here it's from the Financial Times. And as you can see here it's updated quite a lot but I just want to show you this is the main, the main ones. So when we look at the UK, the UK is continuing to rise 11.1%. So remember what I said about inflation being down to 10%. That happened this year, it's happened during the summer, it's continuing to rise. We can also see the US, the US has turned. We can also see France as well. France at 6.2% in Japan. Japan has gone from inflation that was deflationary, quite significantly deflationary, long after a lot of the developed other developed economies were inflationary. So Japan, I mean, I was watching this, I was watching the Japanese inflation rate for about two years. I was delivering an APAC, which is Asia Pacific and Asia Pacific Economic Outlook, every quarter for a company in the UK, and I was watching inflation in Japan and I was watching what they were trying to do. And I was, because their interest rates were already super low, but I was looking at taxes they were trying to put on consumption and all sorts of things, trying to make inflation happen in Japan. And as you can see, now inflation in Japan is 3.8%, which is the highest level. Okay, admittedly, it was up at that level in May 2014, but before that, the highest level it had got to in July 2008 was 2.3%. And when I was in college was always the country we looked at that had a really, really low economy in the 80s after property crash. That was the country that we were learning about when I was in college that had quantitative easing, which was the printing of money by the Central Bank. And of course, when it came to over here, any country you wanted could have been a case to UK, the European Union, the US, Australia, we saw so many countries. When it came to authorizing the book about quantitative easing, there was no shortage of who we could refer to. As I say, when I was in college, different different stories. So, as you can see over here, there's a range of inflation happening everywhere. It's just happening everywhere. And I'm going to bring you to another graphic and now in a moment and you'll see how what I mean by everywhere. But there is another source of inflation that I haven't spoken about yet. Now it is reflected in what I've spoken about to you already through demand for particularly cost push. And that is imported inflation. So, as a business, in my own case, we do business with UK. Sorry, what we do, but we do business with US. Over the past year, we're two customers in the US. Over the past year, it has been wonderful doing business in the US when you get paid dollars, because the dollar strength and strength and strength and strength it was magic. Because we never to push up our prices, but we were getting more money because the dollar strength, strength, strength me. In August, I went to the States to meet one of those customers and I was there for two weeks. Now, this is then when I'm going to the States. Now, if I'm going to the States, ultimately every single thing I buy, everything I buy as soon as I land there is imported for me, because I am somebody that's based in Ireland. So anything I'm buying, if I am buying dinner, if I'm buying actually about this year, if I am buying a train ticket, if no matter what I'm buying as an Irish person, I'm importing goods and services from the US. Now, that wasn't so pretty because then, of course, every single thing that I'm buying, I have to buy the higher exchange rate, the higher inflation rate, sorry, higher exchange rate, the stronger dollar. And that's imported inflation. Now, the reason that I didn't bring this up to you earlier is because that of course is a cost which is pushed up. And as a result then, again, I either absorb that. Now, look, to be doing business with a country for a year in comparison to spending two weeks over there, as you can imagine, it was much better to be doing business for the year as distinct to what I was spending when I was there. But the point I'm making is still the same. Think about anybody who went to Disney this year in Orlando or Los Angeles. They're importing hospitality. They're importing tourism services. Think about anybody buying in goods from the US and selling them there on. Again, they're importing. So if they're importing things at a higher price because of the dollar, well then of course that they push up their cost. And you can also see this peer of course being reflected as well in all of these various economies too because the UK economy is 80% services for example, 20% products. We're getting a lot more into the UK economy and it would be really interesting to do that. But given the time we have, job I have to do tonight, we don't quite have time. So let me just pop in here. I'm going to take a look at Ireland. And in Ireland. Here, if I do this, I'm going to pretty much very simple graph to what I've shown you in the CSO. This one of course goes back to, I remember, I remember all of this time. An economist living in Ireland in 2008, 9, 10, 11, 12 was extremely interesting. Of course, unfortunately for the wrong reasons, but I remember all of this. I remember deflation happening. I remember slowing deflation. I remember accelerating inflation. I remember all those things. And then of course all that has happened throughout here. So we can see that inflation in Ireland was approaching 5% back in December 2007. The fortunes the country were going to change around that time a lot of it had been embedded in the economy at that stage anyway. And as we can see deflation happened very significant, very steep. And that's a very difficult place to be in an in as an economy because I got a phone call from the company where Bob Carr. I was in a traffic jam in Northern Ireland. I'm just thinking back to that. Anyway, the time is relevant. But the way what they were saying is, hi Susan, listen, we're just letting you know we're going to have a sale on in the garage over the next couple of weeks because we're expecting car prices to go up next year. And if you want to get in early at now would be a good time to do that. That's the type of mindset that people go through in an inflationary environment. I better buy now before prices go further. That can be for housing, that can be for oil, that can be for cars, that can be for a couch. But think about what happens with deflation is, I might just put off my expenditure because the price could be lower next month, next week, next year. And of course if people put off their consumption, well then prices sometimes have to be even lower to encourage people to buy and then of course that can perpetuate the spiral. So deflation is deflation deflationary spiral, particularly one that was happening like that was very difficult to get out of. But I'm sure lots of you. If you go on to study economics in college or at all, in fact, in just in general, the Irish and indeed the European debt prices of 2010 and beyond was a case study that provided lots of people with lots of lessons, lots of lessons. But in here, what I can do is I can create my own HPC HICP. Ireland, France, Spain, since I can pick out countries in the workup, Argentina. Okay, the minute I add in Argentina, look what's happened is that Argentina, Argentinian inflation is 88%. Okay. There you go, you can see that at the moment Irish inflation is higher than Spanish inflation, which is higher than French inflation, which is harder than Japanese. So you pick whatever countries that you want and you can actually see the change in there. If you want an overall global picture scroll on down to this one. And this year will actually tell us where every country in the map is now the really, really blue ones. So if you pick out Nigeria, I looked at Sudan there earlier 107%. 107% means prices doubled in the year to date. Which is massive, obviously. If we look over here to India, 6.8%. India looks very big there now in that particular the way the way it's looking China 2.1% and the state 7.7% seems very low for China actually. There's also over here 9.2% and you can have a look then at any particular area. I'm just going to scroll on down and I just going to take a look at one more point here, which is the inflation forecast for 2023. And I just want to point out the very beginning of this article is summarized summarizes very succinctly expectations and that is inflation has started to show signs of easing from the multi decade highs in our case 38 years. We've reached in many countries following Russia's full scale invasion of the US of the of Ukraine. The latest figures of the more work, most of the world's largest economy still make for worrying reading, which we've looked at with bright price pressures remaining high as the war continues to keep energy and food prices elevated. But in some countries, pressures have eased and energy and food wholesale prices have declined for anyone who's unsure what food wholesale prices are. So let's say I go to super value and I buy a jar of Indian curry paste. No need for me to like tell you what I was eating for dinner this evening but let's say that I buy a jar of Indian curry paste that is as a retailer. Sorry, as me a retail customer buying from retailer. So the reason why I go to super value doesn't buy one or two pots in case I might come in the evening is that instead they might buy, they might have a deal where they might buy hundreds of thousands of those pots of Indian curry paste that's wholesale. So wholesale is when you buy at a much, much, much greater level. And then of course that further goes on through the chain because when I'm, if I'm buying a jar of Indian curry paste. So if I just scroll down here, you can see down here, this is, it does look like inflation at the moment is what this is the expectations and right now, we can see that they are okay France, maybe not so much in Japan certainly not one of the others, we can see that the expectation seems to be that the expectation is for inflation to temper. And I'll talk to you about why where that's coming from but so far example over here in the case of Ireland we're seeing that that inflation is expected now to begin to decrease. Now, before I get any further, knowing that I'm running, of course that I'm running short on time. And again please do pop your questions in if you have some is that what, what, what has been done about this right. If we think about what has happened in Ireland. If we think about what has happened in Ireland. Okay there's been an intervention on public transport right we're aware of that as I mentioned. The other one is of course the energy credit is that I got the the electricity bill the other day. And I looked at how much it was it was one euro 22 cents in December in Ireland, when the heat is on. Of course, obviously, that is not the case that is because 200 euro energy credit has been taken off the bill. So that is what they call a universal energy target no matter what household in the country, no matter how much how many people live in it. No matter how much people earn in any of those households. It's the same thing everybody gets that energy credit. And that at home and cork they live in a house. It doesn't matter what size the house is it doesn't matter where they are it doesn't matter how much they're earning it doesn't matter anything. Everybody gets that energy credit. And that is another target measure on the part of government. Now, that is what has been happening let's say at a fiscal level and this is what we have been seeing various different countries doing to deal with the cost of living along the way I also mentioned the other one for businesses paying staff. The, I remember back when you could only get a 250 euro voucher tax free to give to your to give to your staff. Then it went up to 500 euro particularly because the government said look in light of all that had happened during code in light of all of the uncertainty. And the difficulties that we face and in light of everything that we had asked our staff to do around that timeframe, we're now going to increase to 500. And now this year it's gone up to 1000. That's another fiscal measure all of those are interventions on the part of the government. And any of you that looked at what happened during the budget in 2023. The budget for 2023. There's a range of measures, and I could go on here I could talk about the change in the tax brackets and so on like that. But that's fiscal. Let's look at monetary policy. And this is, I got this from reform.org. This is up to October how central banks have been handling inflation so what do you do as a central bank. What do you do. Well, the three tools are in your book. And they are, you can increase interest rates. You can try to strengthen your exchange rate. You can decrease the monetary supply you can decrease the amount of money that's out there. And you can see, most of countries in the world have increased interest rates. Some of them have increased them very, very significantly. Look at New Zealand, for example, New Zealand is up at the highest of them. Now there's a term we use in monetary policy called a hawk and a hawk. And a hawk hawkish monetary policy is when you take action that can have a particularly strong effect, or it's where you see, you know, maybe moderate inflation anyway. So hawkish moves would be when you would increase interest rates, even if inflation is moderate or you might increase interest rates at a higher level than expected. Then dovish, this is what you're seeing down here in Japan, dovish is when you do the opposite is when you leave inflation run more let's say than others might. And that's why you see here that this is described as central banks and the 10 big developed economies have raised rates by a combined 2040 basis points. Now that really doesn't mean anything. That means when you just combine all of the interest rates across various different countries and add them all together. It's an, you know, it's an academic number it doesn't actually mean anything necessarily. In this cycle today, which upon being the whole dog dog being, it has the lowest interest rate, and based on the most recent data that is in this infographic. So here we've got New Zealand, US, then Canada, Australia, Norway, UK, Sweden, Eurozone, because of course Ireland doesn't affect or influence its own interest rate. That comes from the ECB Switzerland and Japan, Japan still being at that stage it was under, as we say underwater under under 0%. So what is the theory behind this. Okay, well let me explain this now. And of course, when we were writing the book guys I'm telling you this is the way in which the world used to work is that if you can increase interest rates, not if you can if you choose to as a central bank. If you increase interest rates, then what happens is that you slow down the economy. So what you're doing is, you're decreasing the attractiveness of borrowing, because we want to make it more expensive. So you're, you're decreasing the amount maybe the people might borrow to buy a house, or you're, you're slowing down the amount that people might borrow in order to do what the house or. And then of course that's kind of that now this is where there's a fiscal contradiction because of course we're trying to encourage people to in salate their house at the same time, but let's, let's take as they as we say in economics let's keep all things equal. So you're slowing things down, you're slowing down investment. And when you slow down investment of course then you're slowing down the market density to consume, and then that slows down consumption. So by increasing the attractiveness of savings, of course the other thing you're doing is by increasing interest rates, you're increasing the relative attractiveness of savings. So by increasing the attractiveness of savings again you're slowing down consumption. And the idea is then is that then the economy has to react by decreasing prices to encourage more consumption to happen again to encourage more people to spend, etc. So the idea here is that as you slow down the economy is that prices fall as well. What's happening at the moment is going back to Ursula Vendell van der Leyen is that this time a lot of this has been driven by a war that is continuing. It is being driven by the fact that if I decided not to buy a loaf of bread in one supermarket in Dublin, and I simply cross the road and I go to another supermarket in Dublin it's easy for me to swap my consumption. So I could walk across the road, or I could drive two miles across the city. Even if I, and I grew up in Warwick Island, if I was to say right I'm not going to buy a loaf of bread in Balancolic in Gorka instead I'm going to go to Macro. Or I went to Calais in Galway, if I say right I'm not going to go to Balancola for such and such thing instead I'm going to go to Adelaide. I could do that. You could swap your consumption really quickly. That is an environment of where you've almost perfect competition or you're very very close substitutes. You can't just switch on another gas pipeline. You can't just like I say, say right look let's just create a wind farm there. Two miles across outside of Dublin, or two miles into the IOC you can do it that quickly. And as if you read that straight stage the Union address and I did. Interesting reading for a range of reasons. One of the things in particular that the EU now wants to focus on is hydrogen power for example, you can just switch that up. And that is why we're seeing these really really demand full pressures. That's what's happening. So yes we're seeing central banks increase interest rates. Yes we're seeing that feed into inflation itself, but that is the way in which this theoretically is supposed to work. And remember all these central banks have objectives. The ECB keep inflation out of below 2%. The UK Bank of England same thing in the in the case of the Fed, they have to manage price at the price level or inflation as well as full employment. And they have objectives and they can't just stand idly by. Now, whether there is effective. As a result of what we're seeing. Well of course that's a whole other debate. And the last thing I want to finish up with in the last minute that I have with you is this is just I just want to go down to expectations. Is that in it is expected that from now inflation would look like it is falling. I don't say prices will stop rising I need to stress that point inflation is the rate at which prices rise. So while we might see here a decline in expectations around what inflation might be that might that still implies the prices will go up but just at a slower pace. Like we don't see any here leading into the inflation. So just to make that point. And I am now perfectly on time. I want to thank you all very much for being here. As I mentioned we will be sending out the recording, and we will take care of that as soon as we possibly can. My name is Susan is going to of course please feel free to send me any message afterwards want to check in with me. I'm Susan is calling on Instagram. I'm on LinkedIn, I'm on Twitter, I'm pretty much on most things. So please do feel free to do that. If you're spending the time here with me whether you're watching me live tonight Tuesday at the 6th of December or whether you're looking at the recording. And of course, I will see you all in the new year with a new webinar. I know exactly what it's going to be and everything else we'll share the details with you. Thank you everyone have a wonderful Christmas and I'll talk to you next year.