As per the revised Q4 data, we now see that unit labour costs slid at a 5.9 %
annual rate, the third decline in the past four quarters. On a year-over-year
basis, unit labour costs plunged 4.7%, which is unprecedented (the pre-revised
YoY trend was -2.8%). As Chart 1 illustrates, there is a tight 82% correlation
between unit labour costs and the trend in headline inflation, which we can only
assume is going to fall sharply in coming months and quarters.