Why Australia risks being the wooden spooner in the inflation race
Treasurer Jim Chalmers will be keeping his fingers crossed that the disinflation that is now sweeping major global economies will soon make itself felt in Australia.
Treasurer Jim Chalmers will be disappointed that Australia looks set to be a laggard in bringing inflation under control Alex Ellinghausen
Chalmers was, of course, very was keen to blame global factors for Australia’s stubbornly high headline inflation rate, which is the highest among the world’s large advanced economies.
“The world is inflicting price pressures on Australians and we are doing the best we can to ease them,” he said last month after the release of yet another consumer price index report pointing to persistently high domestic inflation.
The problem for Chalmers is that inflation is now easing faster than expected across most advanced economies. And investors are increasingly optimistic that after a frustrating two-year battle, major global central banks are now on the cusp of victory against surging prices.
In the United States, consumer prices were flat in October compared with the previous month, and rose 3.2 per cent from a year earlier, helped by falling petrol prices, and slowing growth in the cost of housing and other services. This represents a significant improvement from the peak of 9.1 per cent back in June 2022.
The eurozone has also enjoyed a greater than expected easing of price pressures, with inflation falling to 2.9 per cent in October, down from 4.3 per cent in September. The region’s inflation rate peaked at 10.6 per cent in October last year.
Even the United Kingdom is making headway in its battle with inflation, with the consumer price index advancing 4.6 per cent in October from a year earlier, down from 6.7 per cent the
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