Inflation is back!
Prices are surging across the board and right around the world.
The $22 Trillion a year US economy, by far the world’s largest, is being rocked by 7% inflation – the fastest rate in 40 years.
Are we headed back to the bad old days of stagflation?
Tom Switzer, of SwitzerDaily, argues it’s not.
His reasoning?
“… if the Reserve Bank of the 1980s saw inflation of 7% (just like the Federal Reserve is now seeing in the States), term deposit rates would be about 10% and home loan interest rates would be 13%!
You can still get 1.89% home loan interest rates at loans.com.au. Clearly, times today are very different to 30 or 40 years ago, but there are plenty of Australians who can relive that nightmare when inflation kept rising and along with the interest rate that people had to endure to keep their homes. The money going into pleasing the banks meant holidays weren’t taken, new clothes weren’t bought and cars were primarily second hand. Not surprisingly in the early 1990s, we had a lulu of a recession!”
Convinced?
If you’d like to read more … go here.
Over on Auntie, Lucia Stein notes that Aussie CPI increases are significantly lower, at only 3%. That compares well to data from nearly 50 other countries.
“Data anlaysis from Pew Research Center from 46 nations found that in the period between July and September last year, the rate was higher for 39 countries than in the same period in 2019.
While prices aren’t rising as fast here in Australia, people are still paying more at the supermarket, as they fuel up or when they are looking for a car.
The latest figures for the September quarter showed Australia’s annual inflation now running at 3 per cent (seasonally adjusted).”
But, we aren’t sure what will come next. Read on.
Did the Aussie property market peak last March?
New data has revealed what many brokers had long suspected: the property market in Australia has finally peaked.
Read more on Brokernews.au
CoreLogic has recorded a plateau in Sydney, with just 0.3% of growth rate in prices in December 2021, while Melbourne’s market actually dropped slightly, with a 0.1% declining rate in prices.
But, not every analyst agrees. Tim Lawless at CoreLogic says “To date, the quarterly trend remains positive across the major regions, with the only exception being Darwin houses, which is the only capital city housing sector to record a negative quarterly change,”
Read more of Tim’s argument.
Meanwhile resource stocks are headed higher as commodity prices rise.
Record $379bn earnings forecast for resources, energy exports
Resource and energy export earnings are forecast to reach a staggering $379 billion in 2021–22 as demand for our coal and gas surges in the face of a global energy shortage.
The December edition of the Resources and Energy Quarterly (REQ) from the Department of Industry, Science, Energy and Resources found that high commodity prices, good volume growth and a weak Australian dollar are driving a surge in export earnings.
Minister for Resources and Water Keith Pitt said that the resources sector once again has been shown to be the bedrock of the Australian economy and would strongly support the nation’s future growth.
“The resources sector has risen above the challenges of the pandemic and will continue to deliver for our nation in the years ahead,” Minister Pitt said.
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