Yesterday’s inflation print doesn’t fundamentally change my view of the position of the economy. Employment growth continues to impress, and capacity constraints are starting to appear in some sectors for some jobs (particularly skilled labour). But this is unlikely to spill over to a broad-based pick-up in wages growth in the near term. There is still ample spare capacity in the economy, much of which is captured in the standard labour market metrics (as indicated by the rising participation rate), and this will need to be absorbed before pressures generally start to build in the labour market. Moreover, those that are currently out of work or working fewer hours than they would like may not be able to pivot into the sectors where demand is strongest. How the labour force works through this transition over the next 12-24 months (and what happens with the international border and the return of migrant workers and students) will be crucial determinants of when and how wage and price pressures materialise.