Yesterday afternoon I had a quick chat with Scott Emerson on his 4BC Drive program about the accelerating CPI inflation revealed by the ABS yesterday (see chart above) and what it means for interest rates, with bank chief economists now predicting an August cash rate hike by the RBA. This is something we probably should have been expecting given that inflation is reaching the highest rates in decades in the US and UK, and Australia has also seen a large growth in the money supply, associated with Quantitative Easing and a housing credit boom. Of course, the implicit assumption in the speculation about future rate rises is that the omicron wave is short-lived, the economy rebounds sharply, and wages growth increases. Incidentally, Scott surprised me with a question about federal Opposition leader Anthony Albanese’s bold promise of higher wages growth under a government led by him. Check out my conversation with Scott via the 4BC website:
Regarding inflation in other advanced economies, last week we learned the UK is experiencing its highest CPI inflation since the early nineties (see chart below).
And a week or so before we got the UK data we learned the US is experiencing its highest CPI inflation since the early eighties (see chart below).
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