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Australia entering into hyperinflation? CPI figures released October 2007, core inflation 16 yr high.

Posted by Adrian on October 24, 2007

As expected by the Australian CPI figures, prices grew significantly higher in the 3rd quarter at a 0.7 % up 1.2% in the last 3mths. Up an overall 1.9%.

The weighted-median inflation measure an inflation gauge that the RBA measure from, in simple terms the ‘core’ measure that measures everyday consumer prices, has risen to 0.9%, a percent higher than what economist/markets were expecting which was a 0.8% rise. The core inflation is the measure for food, clothes, utility costs, rental, housing mortgages which are all now heavily inflated.

Slight offsets from falling fuel and child care rebates in the last quarter, but hardly any effect on the inflation figure of 0.9%. With fuel and food costs set to rise in the coming months inflation will become more serious for the Australian economy. Could Australian enter hyperinflation? Possibly. Prices are are climbing dramatically upward, lead by food, fuel and housing.

I expect a 95% chance that the RBA will increases rates in November by 25 basis points (0.25%), bringing the cash rate to 6.75% from 6.50%. If inflation is not contained, we will see interest rates hike again early next year. If the RBA pauses and decides not to increase rates in November 2007, there will be a dramatically spike upward in consumer prices which will lead to a hyper-inflated economy.

But Australia, like Europe and the rest of Asia are currently in the midst of higher food, oil inflation, Bloomberg.com – Australia’s inflation

Annual inflation in Europe in September exceeded the European Central Bank’s 2 percent ceiling for the first time in more than a year. China’s annual inflation rate surged to a 10-year high of 6.5 percent in August.

French annual inflation accelerated to 1.6 percent last month. Singapore’s consumer prices rose 2.7 percent from a year earlier, close to the strongest increase in more than 12 years.

“Prepare yourselves for some serious inflation in your cost of living, because globally we are seeing pricing power starting to return to farmers,” Futuris’s Wozniczka said.

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2 Responses to “Australia entering into hyperinflation? CPI figures released October 2007, core inflation 16 yr high.”

  1. […] *AUSTRALIAN INFLATION UPDATE AS OF OCTOBER 2007* […]

  2. […] This is all due to the inflationary conditions revealed by October’s CPI, (please refer to Australia entering into hyperinflation? CPI figures released October 2007, core infl… […]

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