Home Information Other Countries’ Inflation Is Much Higher Than Australia’s.

Other Countries’ Inflation Is Much Higher Than Australia’s.

by Jasbinder Singh
Other countries' inflation is much higher than Australia's.

Prime Minister Scott Morrison defended his government’s economic management, claiming that inflation in other countries is much worse.

The Consumer Price Index (CPI) released yesterday confirmed what many Australians already knew: the cost of living has risen dramatically.

According to the most recent Australian Bureau of Statistics (ABS) data, the CPI rose 2.1 percent in the March 2022 quarter and 5.1 percent year on year.

This was the highest quarterly and annual increase since the implementation of the goods and services tax (GST), putting pressure on the Reserve Bank to raise interest rates during the election campaign.

Mr. Morrison, on the other hand, pointed out that while inflation in Australia was 5.1%, it was much higher in other countries – nearly 7% in New Zealand and Canada, over 7% in Europe, and 8.5% in the US.

“We have stronger job growth and stronger economic growth than all other advanced economies in the world and the G7,” Mr. Morrison said on Today.

The Prime Minister stated that Australia had maintained its Triple-A credit rating, reduced unemployment, and was undergoing the worst economic crisis since the Great Depression – 30 times worse than the global financial crisis.

He mentioned how the government had cut the gasoline tax in half and implemented JobKeeper, which he claimed had saved 700,000 jobs.

“The Australian economy today, in comparison to the United States, the United Kingdom, France, Germany, Canada, Japan, and New Zealand, all of these economies, we are in a much stronger position to take advantage of the opportunities that are ahead,” he said.

inflation

He claimed that the pandemic had limited the number of workers who could enter the country, which had an impact on the price of fruits and vegetables. The government had now implemented the agricultural visa program and expanded the Pacific workers scheme.

“Running a country in the midst of a pandemic is difficult… Australians, I believe, are aware of this.

“As I look forwards, I see those challenges in many ways receding into the rearview mirror, and we have set ourselves up to be very successful in the years ahead, with a very strong economic plan that has been proven in the most difficult of times.”

Mr. Morrison stated that the Coalition had also promised lower taxes in the future.

“Our ship is sailing ahead and heading in the right direction, and now is not the time to put that in the hands of inexperienced sailors,” he said.

Labor’s shadow treasurer, Jim Chalmers, however, stated that falling real wages were a feature of the economy even before the Covid pandemic and Ukraine war.

“We’ve had almost a decade now of stagnant wage growth, which has resulted in falling real wages in recent times because we’ve got this diabolical triple whammy on Scott Morrison’s watch, which is the cost of living going through the roof, real wages going backward, and now the prospect of interest rate rises very soon,” Dr. Chalmers said on 7.30.

He stated that Australia required a larger and better-trained labor force.

“Bigger in the sense that childcare policy will allow more people to work and earn more,” he explained.

inflation

“We need a better-trained workforce so that people can take advantage of the opportunities that a recovering economy provides,” Dr. Chalmers said.

“We must invest in the digital economy, the care economy, and advanced manufacturing in the ways that we have proposed because it is not just the quantity of spending that matters, but also the quality of spending.”

According to EY Oceania senior economist Johnathan McMenamin, there are several reasons why inflation in America is so high.

Inflation in the United States is calculated differently than in Australia; for example, it includes items such as used cars in its basket of goods, which Australia does not. This has made a difference because the cost of used cars has skyrocketed.

Electricity prices have risen significantly in the United States, but not as much in Australia.

Another reason, according to Mr. McMenamin, is that America’s labor market has been more disrupted, with trends such as the Great Resignation, which has seen many workers quit their jobs and pushed up wages.

“The United States has also stimulated its economy more than most other advanced economies,” McMenamin added.

“They provided generous payments to people during the pandemic, as well as inflation increased business support.”

Another less important reason, according to Mr. McMenamin, is a greater shift in spending to goods over services, which occurred in Australia but to a lesser extent, and this, combined with ongoing supply issues, has caused prices to rise.

When might the cost of living start to fall?

Sarah Hunter, the senior economist at KPMG, told ABC News Breakfast that the CPI figure could improve in the future if there are no further global disruptions and if the Chinese lockdowns are lifted quickly.

“Fuel prices are already coming back off their peak, so globally, prices are now below $100 a barrel and they did peak at $140,” she said, adding that the government had also cut the fuel excise in half, which would also lower prices.

Food and building materials, on the other hand, were unlikely to fall significantly in price.

“The impact of the conflict in Ukraine is particularly challenging for food supply chains,” she said.

She stated that Ukraine was a major food supplier and that global building construction activity remained very strong.

“In terms of the outlook,” she explained, “it’s a mixed bag.”

“Because of the move in fuel prices, we expect the headline (CPI) to fall a little.” However, some of the other components are unlikely to revert in the near future.”

inflation

In Australia, prices are rising.

The price of new dwellings (+5.7%), automotive fuel (+11%), and tertiary education (+6.3%) were the most significant contributors to the March quarter CPI rise in Australia.

“Continual shortages of building supplies and labor, increased freight costs, and ongoing strong demand all contributed to price increases for newly built dwellings,” ABS head of prices statistics Michelle Marquardt said.

The increase in tertiary education was caused by changes in student contribution bands and fees that were implemented last year.

Significant increases were also recorded across the food group (+2.8%), owing to high transport, fertilizer, packaging, and ingredient costs, as well as Covid-related disruptions and herd restocking due to favorable weather.

Vegetables (+6.6%), waters, soft drinks, juices (+5.6%), fruit (+4.9%), and beef (+7.6%) were the main contributors to the increase in food prices.

This increase was “softened” by voucher programs in Sydney and Melbourne, which reduced out-of-pocket expenses for meals out and takeaways.

Groceries inflation increased by 4% when takeout and restaurant meals are excluded.

Other grocery prices rose as well, including non-durable household products (+6.7%), which include items such as toilet paper and paper towels. 

Related Articles

1 comment

Other Countries' Inflation Is Much Higher Than ... 5th May 2022 - 6:00 am

[…] Prime Minister Scott Morrison defended his government's economic management, claiming that inflation in other countries is much worse.  […]

Reply

Leave a Comment