Australia is supposed to be in the midst of a recession; and yet, underlying inflation is still running at 4% per annum.
If that’s the best we can do … what levels will inflation finally reach, once the economy moves into its recovery phase?
Strong sales have seen retailers cutting prices less than expected. And generally, other prices have held firm — because wages have not yet been affected by increases in unemployment.
On top of this, there are also serious supply constraints on the housing front, which are pushing up rentals.
h3. How will this affect things? [Read more…]