Shoppers queueing inside a mall in the centre of Sydney in Australia on December 17, 2020
Image source: Reuters /Loren Elliott
The price of gasoline and the rollback of governmental subsidies in Australia have been leading to a quick spike of consumer prices there in a yearly pace last quarter in almost 13 years, but a mild core inflation might help offset its lasting effect, as the ongoing lockdowns in populous cities in Australia has followed them, according to a recent report by Reuters.
BIS Oxford Economics chief Australia economist Sarah Hunter told Reuters that the heightened risk due to the Delta variant of the coronavirus will sharply destabilize the economy in the quarter of September and that the core inflation will seem to stay subdued against that backdrop.
The Australian Bureau of Statistics released data on Wednesday that showed the rise of the headline consumer price index or CPI from the previous quarter to 0.8 per cent in the quarter of June ahead of forecasts in the market of an increase by 0.7 per cent.
More consumers in Australia have been demanding mainly for gasoline and secondarily for healthcare, fresh food, and motor vehicles despite the dearth of such supplies, driving up their prices further, while measures for relief amid lockdowns such as payments for child care has artificially depressed the Australian CPI last year, leading the index to rise to a sharp 3.8 per cent.
The Reserve Bank of Australia or RBA has recently released a report that trims a mean measure of the core inflation with an increase of only 0.5 per cent for the quarter and 1.6 per cent for the year, with the inflation running short of the 2 per cent to 3 per cent target band of the bank for more than five years, leading the bank to worry about not reaching 2 per cent until the middle of 2023 even with interest at incredibly low rates.
Observers has been seeing a scant sign of the kind of broad pressures on wage in the United States, while Australian companies have been seeking to control prices above other concerns, with the extension of lockdown of Sydney for another four weeks due to the spread of the Delta variant stifling consumer spending and employment for the quarter and thus retarding the economic recovery of the country.
Commonwealth Bank of Australia national economics head Gareth Aird foresees a decline of the economy by 2.7 per cent up to November, warning that a deep contraction of the Australian gross domestic product or GDP in the third quarter of this year is now a fait accompli.
Aird said, “Substantial policy support will once again be needed to ensure that the economic rebound is swift when restrictions are erased”.