This week saw the Reserve Bank of Australia (RBA) increase interest rates due to stubbornly high inflation. Higher interest rates for the short-term are seen as a necessary medicine to ensure that inflation is not high in the long-term. So who would be affected the most if inflation was to remain high? The fact is that high inflation does not affect everyone equally. It acts like a regressive tax, hitting hardest those with the least flexibility to adjust their income, …

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Headline inflation and core inflation are two measures used to track changes in the overall price level of goods and services in an economy, but they differ in terms of what they include and how they are calculated. Headline Inflation: This measures the overall inflation rate including all goods and services within the consumer basket. It reflects changes in the prices of goods and services commonly purchased by consumers, such as food, housing, transportation, and energy. Headline inflation can be …

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In Australia, the monthly CPI indicator is up 3.5 per cent in the 12 months to March 2024. The Reserve Bank of Australia has an inflation target of between 2 and 3 per cent. The RBA has raised interest rates over almost 2 years to help bring inflation down their target range. However, what happens if inflation is left unchecked? If this happens, then it can lead to various negative consequences for an economy: Loss of Purchasing Power: Inflation erodes …

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Inflation is the rising cost of goods and services. But inflation is particularly dangerous as it is the loss of purchasing power to consumers. In this article we discuss the main causes of inflation. Cost push inflation: One way inflation is caused is the “cost push”. This occurs when companies have increased costs associated with producing a product and pass this on to the consumer to maintain their profit margin. Increased costs can come from raw materials, energy, transport, or …

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The RBA has hiked interest rates for 10 consecutive months to combat inflation. In this article we will discuss what is inflation and why it is so bad. What does inflation mean? The simple definition of inflation is the general rising of prices. This means the decrease of purchasing value for goods and services. For the average consumer it means there is less money in the household budget when inflation rises which leads to less funds for discretionary spending. Causes …

Read MoreWhy do we fear inflation?