The 1.3 percent quarter-on-quarter increase in Australia’s CPI index in 4Q21 raised the inflation rate to 3.5 percent YoY, higher than the modest increase to 3.2 percent predicted by the consensus.
However, even at 3.5 percent, Australia’s inflation rate is significantly lower than that of the United States or Europe. As a result, despite the market’s aggressive expectations for the cash rate, the aggressive rate rises that are being priced in for the US, and even market chatter about ECB raises, the aggressive rate hikes that are being priced in for Australia are not so clear.
In addition to the headline increase, the trimmed mean inflation rate increased in the fourth quarter, rising to 2.6 percent YoY from 2.1 percent in the previous quarter, and the weighted median inflation rate increased to 2.7 percent from 2.2 percent earlier. However, variables such as energy price surges appear to be doing a lot of the heavy lifting for inflation right now, with the transportation component topping the list of QoQ contributors. However, the impact of service components such as recreation to quarterly inflation should be monitored.
What is the inflation rate in Australia in 2021?
According to the latest figures from the Australian Bureau of Statistics, the Consumer Price Index (CPI) climbed 1.3 percent in the December 2021 quarter and 3.5 percent annually (ABS).
What is the inflation rate in Australia in 2022?
Australians predicted 4.9 percent annual inflation for the next two years in January 2022, up 0.1 percent points from December 2021. Inflation Expectations in January matched the seven-year high set in November 2021 the highest level since November 2014.
What is the inflation rate for 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.
What is the Consumer Price Index (CPI) for September 2021?
- In September 2021 (Index: 112.4), CPIH inflation was 2.9 percent, down from 3.0 percent in August 2021.
- In September 2021 (Index: 112.4), CPI inflation was 3.1 percent, down from 3.2 percent in August 2021.
- In September 2021 (Index: 308.6), RPI inflation was 4.9 percent, up from 4.8 percent in August 2021.
RPI is no longer considered an official measure of inflation by the Office for National Statistics.
What is a reasonable rate of inflation?
The Federal Reserve has not set a formal inflation target, but policymakers usually consider that a rate of roughly 2% or somewhat less is acceptable.
Participants in the Federal Open Market Committee (FOMC), which includes members of the Board of Governors and presidents of Federal Reserve Banks, make projections for how prices of goods and services purchased by individuals (known as personal consumption expenditures, or PCE) will change over time four times a year. The FOMC’s longer-run inflation projection is the rate of inflation that it considers is most consistent with long-term price stability. The FOMC can then use monetary policy to help keep inflation at a reasonable level, one that is neither too high nor too low. If inflation is too low, the economy may be at risk of deflation, which indicates that prices and possibly wages are declining on averagea phenomena linked with extremely weak economic conditions. If the economy declines, having at least a minor degree of inflation makes it less likely that the economy will suffer from severe deflation.
The longer-run PCE inflation predictions of FOMC panelists ranged from 1.5 percent to 2.0 percent as of June 22, 2011.
What is a high rate of inflation?
Inflation is typically thought to be damaging to an economy when it is too high, and it is also thought to be negative when it is too low. Many economists advocate for a low to moderate inflation rate of roughly 2% per year as a middle ground.
In general, rising inflation is bad for savers since it reduces the purchase value of their money. Borrowers, on the other hand, may gain since the inflation-adjusted value of their outstanding debts decreases with time.
Is Australia’s inflation increasing?
The Consumer Price Index in Australia increased by 1.3 percent in the three months to December, bringing inflation for the entire year of 2021 to 3.5 percent.
This is higher than the Reserve Bank of Australia’s medium-term inflation goal range of 2-3 percent. It will fuel anticipation that the central bank may raise interest rates far sooner than 2024, as the bank’s governor, Philip Lowe, predicted.
Lowe and the Reserve Bank’s board, on the other hand, are unlikely to be scared into a rate hike so readily.
A small amount of inflation, but not too much, is preferred by central banks. Prices that are decreasing or climbing too quickly are harmful for an economy, according to history. When inflation increases above the sweet spot, a central bank’s customary approach is to raise interest rates to dampen demand (through the interbank interest rate known as the cash rate, which then flows into many other interest rates such as on home loans).
What will the CPI rise to in 2021?
The Consumer Price Index for All Urban Consumers (CPI-U) increased 7.5 percent from January 2021 to January 2022. Since the 12-month period ending in February 1982, this is the greatest 12-month gain. Food costs have risen 7.0 percent in the last year, while energy costs have risen 27.0 percent.
What is the unemployment rate in Australia?
According to fresh data issued today by the Australian Bureau of Statistics (ABS), Australia’s unemployment rate has dropped to its lowest level in almost 13 years, touching 4%. The result outperformed market forecasts, which predicted a decline to 4.1%. In August 2008, unemployment was at 4% for the first time.
In Australia, what causes inflation?
Supply disruptions or seasonal sales might generate temporary changes in inflation, whereas a consistent increase in wage growth across the community can produce enduring increases in inflation. When it comes to monetary policy, the Reserve Bank “looks past” transient swings in inflation.