There's good inflation, and then there is bad inflation. Good inflation is where wages rise, giving consumers the edge when it comes to buying property, obtaining loans, imported goods as well as cheaper access to commodities. And while commodities are good value the businesses they work for will be able to pass on the savings to their workers as increased wages, which gets passed onto the economy with their spending.
So I take it that those who believe that good inflation will continue to also believe that we will never import inflation (that cannot be controlled) as in higher fuel costs and consumer goods.
Enter bad inflation. Bad inflation is where the costs of items that are needed, such as food, fuel and clothing rise disproportionately against wages. High costs for fuel will most likely impact the whole economic chain, leaving no sector unscathed. We have forgotten how fragile our economy had become last year, as households were screaming blue murder due to the high interest rates (only 8%?), and high costs of petrol. Everyday last year I had to put up with truckies on talk back radio complaining that they cannot keep running the show due to high diesel costs. The costs to fill up many big trucks exceeded 1000 dollars last year!
So tell me, how are we going to continue to see good inflation, with wages and house prices going up while we import inflation that we cannot control? Is our housing public, which is already over exposed to debt, going to be able to afford their high mortgage repayments when much of their money is going to be swallowed up by high fuel costs, high food costs, high clothing costs, and high mortgage payments as the interest rates have been jacked up to halt in the bad inflation?
As it is now, in the last year Australians have had their working hours reduced as a direct result of increased population. The population increase has diluted our individual worth to the economy, as we have not been able to increase the number of jobs/hours as needed. So all we've seen is more part time jobs, but less money being taken home by the public.
We need to be careful and stop looking back in history as guidance, as this time things are massively different to every other financial crises.
