29 Jul 2021
Australian Consumer Price Index (CPI)
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The Australian Bureau of Statistics (ABS) has just published that the annual CPI inflation increased to 3.8% to the 30 June 2021.
This big jump is a reaction to the introduction of free child care and a record fall in fuel prices in the 30 June 2020 quarter last year which when adjusted for these large one-off price impacts scales annual CPI inflation increase back to 1.6% to the 30 June 2021.
So is the the start of runaway inflation?
Unlikely, as you can see in the attached, inflation in developed economies is forecast to jump up temporarily and then come back down as supply of goods increases as part of the post COVID-19 recovery.
Click for chart.
However, in the longer term our thinking is that inflation is dead or at least will remain at almost nothing because of technology.
Robotics and artificial intelligence are combining together to eliminate humans from the work force. Fewer people working means less wages and it is the absence of wage pressure that subdues inflation.
We will have to wait for time to tell us just how right or wrong we are in our thinking.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.