Will Inflation Commence Decline?

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It’s often said “when America gets the sniffles, Australia catches a cold”.

For decades our economy has mirrored certain aspects of the US economy including, but not limited to, inflation, property growth, interest rates.

The inflation rate had been reported at 9.1 percentage last quarter, with pundits predicting a double-digit number was not out of the question.

Instead, the number reduced by nearly 1 percent with over half a million jobs created and unemployment hitting 3.1 percent.

Economists are cautiously calling an end to large interest rate increases in favour of more measured rate increases.

Unfortunately, data from the Australian economy is in arrears by 3 months and makes it difficult to gauge the effect of the most recent interest rate hikes.

It’s worth noting that some of the key drivers of our inflation issues seem to be settling.

The price of some fruit and veg has fallen to more normal levels, and unleaded petrol has dropped in recent weeks.

There is no doubt that property markets have experienced 10-15 percent falls, with other markets going sideways or falling small amounts.

Given the results in the USA, one would hope that Australia has seen the worst of the current inflationary pressures.

Interesting times ahead!