Inflation, the averaged percentage rate by which ‘everything’ has increased in price, for the June quarter, 2011, is 3.6 percent.
So what … 3.6 percent doesn’t sound too bad.
Well compare this to the same quarter last year when the averaged inflation was 0.9 percent.
Now does 3.6 precent, which is a massive 4 times last year’s Q2 rate, look a little high?
And this 3.6 percent is the averaged inflation rate. The inflation rate just for food is 6.1 percent, compared to 1.4 percent in Q2 last year (4.35 time more).
And what about the cost of education, which went up by 0.0 percent (zero) in Q2 2010, but has gone up by 5.9 percent for this year’s June quarter.
And if they were not scary enough, alcohol and tobacco when from 0.7 to 5.6 percent (8 times).
These are pretty scary numbers.
If this trend were to continue, which hopefully it will not, we could expect food (for example) to increase by about 20 percent overall by this time next year.
These numbers practically guarantee that the Reserve Bank will raise interest rates sometime soon—probably within the next three to four months (unless something magical happens to stop inflation going up). Raising interest rates is the main (only) lever the economic controllers have for pulling back rapidly increasing inflation even though there are downsides to doing this. But there are very few, if any, other options because inflation HAS to be slowed down.