Domestic demand is in a good shape as we can see from February’s data on retail sales. Sales increased by 9.4% y/y and September 2003 was the last time month in which the rate was higher. There has been solid wage growth, declines in the unemployment rate and low interest rates. All of these factors have supported good growth in consumer loans and expanded installment purchasing – taken together, we have a number of reasons to see the growth in household spending patterns. With an increasing risk seen in the producer price data, the rapidly growth in retail sales is just another indicator of potential inflationary pressures and they support the expectation of a hike in interest rates in the 2H07. The remaining question is when will the central bank be taking notice of these risks.