Trends in inflation

1980s

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• ==The highest inflation rate was over 11%, in the early 1980s==
  • Before Australia experienced microeconomic reform across many industries,
    • increasing overall productivity (& efficiency) → lowering price levels.
  • Before the recession of the early 1990s

1990s - present

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• Since the early 1990s, Australia has sustained relatively low inflation

  • both headline and |underlying rates ==below 3%== (averaged 2.6%)

• can be attributed to:

  • The success of the RBA’s inflation targeting of between 2-3%
  • Cuts in protection and the encouragement of free trade
    • (microeconomic reform)
    • SEE Australia’s policies regarding free trade and protection
  • Growth of enterprise bargaining in the labour market containing wage pressures

2000s

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• The inflation rate reached 4.5% in 2007–2008, because of:
  • Higher global prices
  • the resources boom
  • and unemployment nearing the NAIRU → increasing wage pressures.
• ended with the global downturn in 2008 (reduced consumer confidence)

2020s (covid & Ukraine)

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• ==inflation rose above 2% to 2.2% (in Q1 2020)==

• caused mostly by COVID:

  • supply chain disruptions → increased global prices → Cost-push inflation
  • • government stimuli → ‘government policies’ inflation

• TODO eco 9.1, 9.2, 9.3 ⏫ 📅 2024-05-20