![]() ![]() But because inflation roared here about six months later than the rest of the world, we’re still six months behind as the news improves again. Meantime, the news on inflation in Australia is also improving rapidly. Consumer prices there are unchanged over the past year (yes, Chinese consumer price inflation is zero), while factory prices have been falling fast. And it also helps the global inflation fight that China is struggling to get its growth mojo back. It helps that energy prices are dropping fast, freight prices are too, while a bunch of commodity prices are easing back. The eurozone is a laggard (at 5.5 percent), and the UK is even worse (at 7.9 percent), but there are special factors affecting both, and in the last couple of months global markets were surprised by the turnaround in price pressures pretty much everywhere. Inflation over the past year is already down to 3 per cent in the US, even lower in Canada, and only a little above 3 percent in Japan. ![]() Inflation is a global fight, and that fight is being won much faster than people realise. So, I can’t say 3 per cent by the end of 2023 still looks likely.īut it won’t be heaps above that, and inflation looks set to drop to 3 per cent in the first half of 2024 – more than a year ahead of the Reserve Bank’s forecast. And it hurt when the new price caps on gas and coal costs into east coast electricity markets initially struggled to get traction.It hurt when the national wage case decision was larger than I had factored in. ![]() But the bottom line added money into an economy already battling inflation.) (Yes, some of that saves money from private pockets, such as lower costs for visiting the doctor, and some of it was sensible social spending, such as better unemployment benefits. It hurt the inflation outlook when the federal budget added $15 billion to spending across just 14 months.But more people add to rents and house prices, as it takes longer to build for the new arrivals.) (Extra migrants don’t mean extra unemployment, as the income they earn creates extra jobs. It hurt the Australian inflation outlook when the migrant intake roared above expectations.Tamara Voninskiīut my faith faltered as some big hits rolled in: The jobs miracle could be the answer on inflation. In January, I held the most optimistic inflation forecast of any economist I knew, seeing CPI gains through calendar 2023 at just 3 per cent. ![]()
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