still 2 % lower than it had been at the end of 2019. more often than not higher inflation is associated with stronger, not weaker, economic activity. at least if you consider the last eighteen months or so as a whole, taking account not just of the resurgence this year but the huge contractions in 2020, that ’ s not what ’ s happened on this occasion. chart 3. inflation has risen significantly in many countries... uk euro area us chart 4.... even though advanced - economy output is barely higher than a couple of years ago per cent level relative to 2019 q4, per cent - 4 - 8 - 12 uk gdp ( output estimate ) - 16 uk market sector output - 1 world gdp - 20 - 2 - 3 - 24 97 99 01 03 05 07 09 11 13 15 17 19 21 twelve - month cpi inflation. includes november flash estimate of euro area inflation. sources : eurostat, ons, refinitiv eikon from lseg, us bureau of economic analysis and bank calculations. world gdp is constructed using gdp data of 188 countries weighted according to their shares in uk exports. uk market sector output is real market sector gross value added. sources : imf world economic outlook ( weo ), ons, refinitiv eikon from lseg and bank calculations. this pattern – levels of output that are still relatively subdued but rapid and skewed price rises – has been evident for some time. qualitatively, at least, nor has there been any change in the best explanation we have for it. inflation in global goods prices looks to be the result of a big shift in global consumer demand, induced by the pandemic, away from services and towards goods. even at the best of times it would have been hard for the supply sides of our economies to adapt to this. with the pandemic also affecting global supply chains for goods it ’ s proved that much harder1. there are still good reasons to think that this rapid inflation in tradable goods prices is likely to fade, and in some cases reverse, before a policy decision taken now could do much to offset it. in contrast, and although many individual policy makers have discussed these points ( i did so in a couple of speeches earlier this year - “ covid and the composition of spending ” in january, and then “ mismatch ” in july ). as the mpc we ’ ve done so in successive monetary policy

, plotted as the red line in chart 10, has actually declined in recent weeks, down nearly 30 % from its peak in mid - september. ) it ’ s therefore quite possible that, in a couple of years, the contribution of some of these items to uk inflation will be not only smaller but negative. sources : baltic exchange and bank calculations. panamax is a sub - index covering mid - sized vessels travelling on 5 of the 23 shipping routes of the full index. it co - moves closely with the overall baltic exchange dry index. having said all that, there ’ s no doubt that the path of these global goods prices is highly uncertain. even if it ’ s still the right judgement that recent inflation rates are “ transitory ”, in the sense i defined earlier, that doesn ’ t mean our central forecasts are an inevitability. in the last monetary policy report the mpc produced two forecasts for inflation, one in which gas prices followed the full path priced into financial markets, and therefore fell steeply throughout the next three years, another in which they stabilised at a relatively high level. even varying just this one thing, the two - year inflation forecast was half a percentage point higher in the second case than in the first. and, in the meantime, we also know that these global pressures are not the only determinant of future inflation. arithmetically, domestic pressures have been less important so far. but the domestic labour market has also come under increasing strain through the course of this year. i now want to have a look at the latest evidence in this area. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice unemployment higher than before the pandemic but the labour market nonetheless looks very tight as we saw earlier, while the economic recovery this year has been predictably rapid, cumulative growth over the period of the pandemic as a whole – taking account of the deep trough from which the economy was having to recover – has not been as impressive. in the third quarter of this year private - sector output grew by a little less than we ’ d anticipated in august and was still 2 % lower than at the end of 2019q4. in contrast, employment growth was stronger than we ’ d expected and unemployment fell further ( chart 13 ). and, although in the three months to september it was still a little ( 0. 3 percentage points ) higher than