The official measure of inflation, at 2.8 per cent, should force a cut in interest rates. But the Reserve Bank is tracking its own inflation measure.
When it comes to inflation, there’s the world inhabited by Australian shoppers, and then there’s the one called home by the Reserve Bank.
You have to go back to the days of Coles and Woolworths slugging it out over cheap loaves and milk to get a bread inflation rate so low. Shoppers, especially those with a mortgage, would be thinking the Reserve Bank should be jumping up and down with joy at this result. It does this because it wants to know what’s at the heart of Australia’s price pressures. Like a cardiac surgeon, the RBA is focused on what’s keeping inflation pumping.
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