The sigh of relief we ALL needed!
Hey there,
Heard of the Consumer Price Index aka CPI?
Well if you’ve heard about inflation rates, then this is usually what they are actually referring to.
And guess what?
For the 2nd month in a row, the inflation rate has fallen.
It’s at 6.8% which is actually 0.6% less than last month!
Enjoy the little graph at the bottom to look at how it’s been going since Feb 2019.
To really put it into perspective, we were looking at 8.4% at its peak in December.
So, can we start celebrating or is it too soon?
This drop is definitely the news we wanted to see.
It’s also reinforcing the whispers that the Reserve Bank is looking to pause the raising of the cash rate.
The whole reason that they have been raising the cash rate is to take the heat off our economy and inflation by discouraging spending.
Once the inflations lowers, the Reserve Bank is likely to halt those cash rate rises.
Which is a nice change for the homeowners with mortgages in the crowd, as it’s been a really tough year or so.
But how did we get here?
In simple terms, there was just too much money pumped into the economies of the world for the last 10 years since the GFC which was needed to get through the pandemic but now is not required.
That has led to the lifting in inflation around the world as prices have increased on pretty much everything.
Combine this with supply change issues and we have a combination of factors driving prices up around the work.
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The main trigger that central banks have to combat rising inflation? Increase rates to take away the demand.
Now most analysts are of the belief we are coming to an end of this lift in interest rates around the world.
This doesn’t necessarily mean we are out of the woods yet, but it does give us some room to breathe.
Inflation is a hard one to predict, which is why I’d take everything with a grain of salt.
There will still be tiny price increases like fuel for example, we can’t avoid it altogether.
But I’d say there’s pretty strong evidence that the worst of it has come and gone.
So enjoy that little tidbit of good news for this week!
Until next time.
Steve.
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