RBA Assistant Goveror Expects Inflation to Accelerate

Shamia N Irving, Friday, February 22, 2008 2:51pm

( terms just to help you better understand the text)

RBA- Reserved Bank of Australia

Inflation- The rise in the general level of prices of goods and services in a given economy over a period of time.

Consumer Price Index (CPI)- measures the average price of consumer goods and services purchased by households.

Domestic Capacity- Australian's point of production at which a firm or industry's average costs begin to rise due to a fixed factor (like land or capital)

Malcolm Edey the RBA's Assistant Governor believes that the CPI figure could spike nearly 4% in the next quarter. He warned the Committee for Economic Development of Australia about the continuation of inflation pressures in Austlalia and how it is occurring during a global economic slowdown. His speech is largely based on the Statement of Monetary Policy which was just released on February 7, 2008 by the RBA. This policy is issued 4 times a year, February, May, August, and November. These statements assess current economic conditions and the prospects for inflation and output growth. With the RBA forecasting a slowing pace in nonfarm growth over the next to years, Malcom Edey said that that will allow some lessening of domestic capacity pressures and generate decline in inflation. Right now in Australia, inflation at the top end of the RBA's target, however they think it will begin to slow slightly by the end of the year, unlike Edey who believes it will only rise.
I'm not sure how Australia works but in the US it seems as the year progresses prices do to. I've never experienced dramatic increases, except after the devastation of hurricane Katrina, but I witness prices steadily rising. Honestly Edey and the RBA can only make predictions and prepare for what they think is to come in the future.