Learn
Newsletter
Offers
Podcast
About
  Back
~
1
min read
· Posted on
April 26, 2024

Australia's inflation rate slows to 3.6%, but it's still too expensive to eat breakfast cereal

RBA has just released the latest inflation results for the March quarter and inflation hit 3.6%, which was above the expected CPI of 3.5%.

What's the key learning?

  • When the cost of goods and services rises, workers often seek higher wages to keep up with increasing living expenses.
  • This cycle of wage rises followed by price increases can create a self-sustaining spiral.
  • While it’s lower than previous quarters, there are some products that are still very much in their inflation-era.

👉 Background: The Reserve Bank of Australia (RBA) tracks the cost of key goods and services in Australia every quarter to see whether prices inflating, remaining flat or deflating. This measure is called the Consumer Price Index (CPI).

👉 What happened: Now, the RBA has just released the latest inflation results for the March quarter and inflation hit 3.6%, which was above the expected CPI of 3.5%.

👉 What else: The annual inflation rate on bread, eggs and biscuits are all still hitting the 7%+ mark, while beer and breakfast cereals are still above 6%. All in all, this higher inflation rate means that it’s becoming unlikely that the RBA will drop the interest rate in 2024. The main reason? Labour costs have significantly increased.

What's the key learning?

💡 When salaries climb at the same rate as inflation, it can often keep the inflation cycle spinning.

💡 When businesses raise wages for workers, it has two flow-on effects:

  • The businesses will often offset these higher staff costs by increasing their prices.
  • The increased salaries mean that the demand for expensive products persist, leading to even further inflation.

💡 This ain’t the first wage-price spiral that Australia has experienced. We’ve seen it four times already: 1979, 1986, 2000 and 2010.

Ready to win at money?

Sign up for Flux and join 100,000 members of the Flux family

Sign Up
A button to App StoreGoogle Play store button
Excellent  4.9 out of 5
Star rating
© 2024 Flux Technologies Pty Ltd and Flux Media Pty Ltd
All rights reserved.
Explore
HomeLearnPodcastAboutNewsletterFlux at Work
Offers
Home LoansSavings AccountsBank AccountsShare TradingCar LoansCredit Cards
Support
CareersContact usPrivacy PolicyTerms of Use
Disclaimer: Flux Technologies Pty Ltd (ABN 86 634 507 172) is an authorised representative (Representative No. 525288) of Mozo Pty Ltd who is the holder of AFSL No. 328141. We also provide general advice on credit products under our own Australian Credit Licence No. 530103. The product information presented does not constitute an offer and we are not recommending or suggesting any particular product. Any product advice presented is of a general nature only, and is not to be taken as any sort of advice as it has not taken into account your personal circumstances, objectives, financial situation or needs. Flux may not cover all products available to you. Check out our Credit Guide and Financial Services Guide for more information.

All information contained in the Flux app, www.flux.finance, www.joinflux.com, app.flux.finance and any podcast of Flux Media Pty Ltd (ABN 27 639 804 345) is for education and entertainment purposes only. It is not intended as a substitute for professional financial, legal or tax advice. Flux Media Pty Ltd is the owner of the registered trade mark, 'What the Flux'. While we do our best to provide accurate information on the podcast, we accept no responsibility for any inaccuracies that may be communicated.