Inflation Australia: RBA governor Michele Bullock is worried about how people react to higher prices for regular items such as petrol, food and rent

Reserve Bank of Australia governor Michele Bullock is noticing price pain at the petrol pump. Millions of motorists are feeling it in their hip pockets, too.and other everyday household items could have implications for expectations of inflation and, potentially, the RBA’s interest rate decisions.

Vanguard senior economist Alexis Gray says inflation expectations change people’s behaviour, by bringing forward demand for products before anticipated price rises and pushing up prices further. High oil prices tend to slow global economic growth, a likelihood Bullock flagged this week. Expensive fuel is effectively a tax on consumers and reduces their spending for other goods and services. These forces can be deflationary, at least for some sectors of the economy.

Inflation expectations are 20 per cent to 40 per cent larger due to the frequency of purchases, compared to the weighted prices of goods and services measured in the official US consumer price index basket.Separately, research published by the American Economic Association finds that oil prices after the 2008 global financial crisis influenced household inflation expectations.

The RBA is determined to “anchor” inflation expectations to avoid inflation becoming self-fulfilling.

Australia Latest News, Australia Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Reserve Bank of Australia: Time for governor Michele Bullock to drop the dead doctrine of the NAIRUThe new RBA leadership has a chance to use intuition rather than prescription to manage inflation.
Source: FinancialReview - 🏆 2. / 90 Read more »

SBS On the Money: RBA Governor's Middle-East inflation warningHear what RBA Governor Michele Bullock had to say about the economic impacts of the escalating conflict in the Middle-East and the threat to inflation and interest rates, plus SBS Finance Editor Ricardo Gonçalves speaks with Mark Gardner from MPC Markets on the day's market action,...
Source: SBSNews - 🏆 3. / 89 Read more »

Australia recession: RBA’s $43b loss prompts call for Chalmers bailoutThe RBA’s huge financial losses from its pandemic stimulus measures have sunk its balance sheet deeper into negative equity.
Source: FinancialReview - 🏆 2. / 90 Read more »

Unemployment rate falls to 3.6 per cent, raising chances of another RBA rate hikeAustralia&x27;s unemployment rate has fallen 0.1 per cent in September, further raising the possibility the Reserve Bank of Australia (RBA) will increase interest rates when it meets in November.
Source: 9NewsAUS - 🏆 10. / 72 Read more »

Unemployment drops from 3.7 to 3.6 per cent, raising chances of RBA rate hikeAustralia's unemployment rate has dropped from 3.7 to 3.6 per cent, as the labour market showed significant strength over September.
Source: SkyNewsAust - 🏆 7. / 78 Read more »

War, house prices and Aussies with two jobs; big challenge for Michele Bullock, Jim ChalmersRising oil prices, higher bond yields and persistently high house prices are colliding with signs of economic pressure.
Source: FinancialReview - 🏆 2. / 90 Read more »