, associated with strong growth in the emerging economies as well as interruptions to the supply of oil as a result of geopolitical developments in the middle east and north africa. uk inflation over the past year has consequently been around 1½ percentage points higher than the central view in our november 2010 inflation report, with the twelve - month rate reaching 5. 2 % in september. that has added to the squeeze on real household incomes already taking place as a result of earlier increases in energy and other import prices, together with the increase in the standard rate of vat to 20 per cent. in the eight quarters since the trough of the recession in the middle of 2009, real household income has fallen 2½ per cent, as only modest wage growth has been more than offset by elevated inflation. and with higher utility prices pushing consumer prices up another 1¼ per cent since june, it is probable that real household disposable income will turn out to have fallen during the second half of this year too. against that background, it is not surprising that real consumer spending growth has been weak. although elevated inflation has been the medium through which some of this squeeze in living standards has been brought about, the squeeze reflects three deeper real economic forces that monetary policy can do little to negate. the first force is the aforesaid rise in the price of commodities, relative to the prices of global goods and services, associated with the confluence of strong demand growth in the emerging economies and commodity producers ’ inability or unwillingness to increase supply to match the extra demand. the second force is the fall in the purchasing power of sterling. before the financial crisis, the uk was operating with an unsustainably low level of national savings and an associated current account deficit. in addition, the crisis has probably led to a long - lasting hit to the demand for financial services exports. generating an expansion in net exports in order to counterbalance the necessary increase in savings and to offset any reduction in the demand for financial services exports then requires a real depreciation of the currency. this was achieved by a fall of a quarter in the trade - weighted value of the nominal sterling exchange rate between the start of the crisis and the end of 20081. although the impact of this depreciation on net exports initially seemed rather disappointing, recent revised data from the ons now suggest that the impact on net exports has been roughly in line with that seen after previous large movements in the exchange rate ( chart 4 ). the third force

key is [ to make ] the reference to asia - although it is very, very hard to refer to it - as a single entity. but we, i think, can work together, and this diversity actually presents a lot of opportunities, just as it is fraught with challenges. 1 / 2 bis - central bankers'speeches where all these put us is that we face a lot of interlinked uncertainties at both regional and global levels. these affect all of us. one can easily make the case that global disruptions require global solutions. but as any economist knows, the bigger the group, the harder it is for collective action to be rational. [ we can refer to ] the famous [ kenneth ] arrow impossibility theorem : " individually rational people are not necessarily collectively rational. " they prefer a to b, or b to c, and c to a. welcome, all of you. i look forward to a very fruitful conference. thank you for coming, and i hope you enjoy your stay here in mactan. let me turn the floor over to [ reserve bank of india ] deputy governor [ rajeshwar ] rao. 2 / 2 bis - central bankers'speeches