David Uren has an article talking about deflation as a global risk.
Both the chief economist of the OECD, Pier Carlo Padoan, and the managing director of the International Monetary Fund, Christine Lagarde, have described the possibility of prices starting to fall as one of the most serious threats to the global economic recovery.
“With inflation running below many central banks’ targets, we see rising risks of deflation, which could prove disastrous for the recovery. If inflation is the genie, then deflation is the ogre that must be fought decisively,” Ms Lagarde said.
Unfortunately Australia is not included in that list. The ABS put our latest inflation rate at 2.3% (sa). David Uren reports on the expected inflation rate (to be released on Wednesday):
The headline figure may be closer to 2.7 per cent, reflecting the influence of high fruit and vegetable prices and the influence of the fall in the dollar.
To be sure that remains within the RBA 2% – 3% target band, but it is well above the levels of many other high-income economies.