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Who Lost the War on Inflation'?

Posted on January 22, 2008

The December quarter CPI is nothing less than disastrous. The 3.6% y/y average outcome for the statistical underlying measures is the worst result for underlying inflation since the great disinflation of the early 1990s and well above the 3.25% forecast in the RBA's November Statement on Monetary Policy. It is sobering to recall that these measures are preferred by the RBA because they capture the persistent component of inflation that forecasts future inflation outcomes. The government talks about a war on inflation,' but that war was lost by the RBA long before today's CPI release. ...

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economy