on a 6 - month and 12 - month basis. i will be watching to see whether the employment cost index data at the end of this month show the deceleration from the third quarter continuing into the fourth quarter. see david autor, arindrajit dube, and annie mcgrew ( 2022 ), “ the unexpected compression : competition at work in the low wage economy, ” lecture delivered at markus ’ academy, bendheim center for finance, princeton university, princeton, n. j. ( via webcast ), december 8, https : / / bcf. princeton. edu / events / david - autur - on - the - unexpected - compression - competition - at - work - in - thelow - wage - economy. since the pandemic, significant supply and demand imbalances have coincided with large increases in retail trade margins in several sectors, increases that have exceeded the contemporaneous increase in wages paid to the workers in those sectors. for example, since the end of 2019, retail trade margins for food and grocery retailers increased by about 25 percent, outstripping the growth in average hourly earnings for workers in that sector, which was just under 19 percent. a similar gap exists between margin and wage increases for general merchandise retailers, which were 24 percent and 14 percent, respectively. - 6let ’ s now turn to the inflation leg of our dual mandate. inflation has declined in recent months from very high levels. with the consumer price index and producer price index now available, total pce ( personal consumption expenditures ) inflation in december is likely to have run at around a 2. 3 percent annualized pace on a 3 - and 6month basis, as compared with 5. 1 percent on a 12 - month basis. this deceleration reflects an easing in war - related energy shocks as well as in core goods inflation : energy and core goods each subtracted nearly three - fourths of 1 percentage point from 3 - month annualized total pce inflation. the declines in energy and core goods are a reversal of previous large increases and are expected to moderate. core pce inflation is running at a 3. 1 percent annualized pace on a 3 - month basis — below its 3. 8 percent reading on a 6 - month basis and 4. 5 percent on a 12 - month basis. within this, recent declines in core goods inflation reflect a reduction in core import prices, an easing of supply chains, a restocking of

maintain its legitimacy, an institution endowed with independence to pursue a specific public objective must act in a transparent manner. • fifth, monetary policy must maintain a medium - term orientation. • sixth, monetary policy must be underpinned by a comprehensive analytical framework. given the importance of maintaining credibility and a medium - term orientation, such a framework must include a thorough analysis of monetary and credit developments, reflecting the necessarily monetary nature of inflation over the longer term. • finally, a clear distinction must be maintained between the determination of the monetary policy stance required to maintain price stability and the provision of liquidity to the money market, the so - called “ separation principle ”. these principles should be the cornerstones of monetary policy - making in normal times but, arguably, become even more important in a time of crisis. in this respect, i would say that our monetary policy, while being pragmatic, has consistently followed these principles and has thus been able to address the challenges that the financial market tensions have brought about. allow me to briefly illustrate this point. our single, clear and unambiguous mandate has ensured that attention has remained focused on the attainment of our objective of maintaining price stability, at a time when other considerations could have come to the fore. at the same time, our monetary policy strategy has ensured that the appropriate mediumterm orientation of monetary policy has been maintained. in particular, the monetary pillar embedded in our strategy ensures that due attention is paid at all times to medium - term developments in nominal variables. the identification of the policy - relevant signal in monetary developments requires a detailed examination of bank balance sheets, complemented by the analysis of other sources of financial information. this is instrumental in understanding market developments, monitoring financial innovation and assessing its implications, for instance, for the transmission mechanism. in this respect, a thorough and broad - based monetary analysis not only provides relevant information on risks to consumer price inflation, but can also support the early detection of financial imbalances and asset price misalignments. 5 finally, by having a clear separation between the monetary policy stance, which as explained, has maintained the appropriate medium - term orientation, and its implementation through liquidity operations, we have proved able to act in the liquidity management domain rapidly and, when necessary, significantly, to support the functioning of the money market that is central to the implementation and transmission of monetary policy. concluding remarks allow me to summarise my remarks with the following points. 1. the long phase