Australia’s Black Dog: Inflation!
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COMMENT, Australia – Inflation is the main challenge to Australian economy.
“It points to the size of the inflation problem that this government inherited from the previous government and it is a challenge this government is determined to meet.
“…In the months of October, November and December Australia had the highest underlying inflation that this country has experienced in 16 years.
“That is a significant problem for the country and … high inflation certainly does put upward pressure on interest rates.”
Australia has become an expensive place to do business. In the major cities.
Why? It has been a long undiagnosed problem in Australia that inflation has been running rampant.
Photo thanks to Flickr user audreyjm529 under Creative Commons Attribution 2.0
Inflation is Australia’s economic black dog.
Inflation has already built-up steam
Business inputs like food, gas, energy, transport, and services have been rising at a good rate for the last few years.
House prices and thus mortgages for house purchase have been rising.
Wages must now rise so people can pay their mortgages.
Inflation has been rising some time
The underlying and headline inflation rate are lower than experience of the costs due to the selected basket of goods used to calculate them.
The basket does not allow for quality of goods (falling quality goods from China lowered inflation, due to Howard’s ‘parallel imports’ laws).
Inflation doesn’t reflect the ‘kitchen table’ experience of rising price in Australia since 2005. From my conversations with normal people in Australia, and noting of price rises, as well as published statistics inflation doesn’t reflect the reality experience by citizens.
To put this in perspective, a friend who came back with his family, after 2 years away, yesterday remarked to me the rise in costs of food, and his total food bill from 2 years ago.
Wither interest rates?
Inflation will need a lot of strength to stop, because under Howard, the pressures already built-up, now we will need some serious measures to halt inflation for real.
I don’t think even statistics can hide inflation now.
CHRISTOPHER HIRE
Speaker. Author. Editor-In-Chief. Executive Director of Innovation, 2thinknow.
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