Is Australia’s economy on a temporary sugar high? 🍭
Inflation data is in, and the news is mixed. Annualized inflation has officially risen for four consecutive months, hitting 3.8% in October. But before we panic, we need to look under the hood.
The Context:
- Annualized inflation rose from 1.9% in June to 3.8% in October.
- However, prices only rose 0.4% in the last quarter. The “rise” is mostly due to very low figures from late 2024 “falling off” the calculation.
The Takeaway:
As Owen Davis points out, the government has been feeding the economy “cotton candy”—short-term stimulants like high immigration and heavy spending. It creates a temporary “sugar high” but lacks long-term substance. With the RBA’s next decision on December 9th, the big question remains: Will they hold, or will they be forced to “rip off the Band-Aid” with a rate hike to curb this spending?
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