Think Australia has a bad economy? This is what inflation looks like in the world

The economy is a balance, but right now the global economy is out of order.
COVID-19 and Russia’s invasion of Ukraine are troubling economies around the world, pushing up the prices of goods and services.
The effects of the pandemic and war, combined with the individual circumstances of different countries, have affected inflation, and here in Australia this has led to maximum not reached in two decades.


Economist Conrad Liveris said an inflation rate of two to three percent would be ideal, as that level leads to sustained growth in the economy and wages.
“This is the goal of the Reserve Bank of Australia, we want it because it promotes economic growth,” he said.
“When it gets out of hand, everything goes backwards or even higher, like what we have in Australia at the moment.”
Mr. Liveris said that because wages are not rising at the same rate as inflation, managing the cost of living is becoming much more difficult.
In an effort to curb inflation, the Reserve Bank has raised interest rates, which affects how banks set their interest rates.
Financial market economists agree that the RBA will raise its interest rate by half a percentage point to 1.85% for the fourth time in a row.

The half-percentage increase, also known as the 50 basis point rate increase, means the average variable-rate mortgage holder will pay an extra $610 a month to service their loan, compared to four months earlier.


US President Joe Biden hopes that the new law, which his government supports, will contain rising inflation.
Inflation rose to 9.1% in the US in June 2022, the highest level since November 1981.
The Inflation Reduction Act is broad and covers health and tax changes, as well as measures to address climate change.
Americans experience the same problems with food and fuel prices as Australians, but to a greater extent.

“For them, these are problems with supplies from China and fuel. It’s the basic household items for them that really cause these kinds of problems, and it just causes, you know, distinct pain,” Mr. Liveris said.

A woman moves through a grocery store with a cart, carrying a child and walking with a small child, while an elderly couple watches her.

Americans have difficulty buying everyday items. Source: A MONKEY / Seth Perlman/AP

He said that the level of government stimulus in the US was higher than in Australia, which played a role in inflation.

“The government is investing heavily in various projects, primarily infrastructure, and providing some government handouts, which is also putting pressure on prices,” Mr. Liveris said.

“But that’s not always the best thing, because when you give people $500, they immediately go and spend it, and companies understand that pretty well, so they set their prices to match that. It’s the same when you’re helping a large group of people rent a house, the landlords put their price on the rent.”


While the Turkish Statistical Institute said that the country’s inflation rate accelerated for the 13th consecutive month to 78.6% in June 2022, Mr. Liveris said that, given the way the Turkish government is operating, he would doubt any data published by the country on inflation rates.

As people in Turkey struggle to afford only a fraction of the groceries they used to buy for their family, it is clear that the country’s current inflation rate is higher and higher than most of Turkey’s G20 counterparts.
Mr. Liveris said that Turkey’s high inflation was a direct result of the country’s lack of independence between institutions and the government.
At the direction of President Recep Tayyip Erdogan, instead of raising interest rates in an attempt to counter inflation, the country lowered interest rates.

Erdogan has voiced his belief that high interest rates push prices up, contrary to conventional economic belief, and fired central bankers who had raised rates to curb inflation.

New Zealand

New Zealand began to feel which led some to consider moving across the ditch to Australia.
In the June quarter, New Zealand recorded a rise in inflation of 7.3%, slightly higher than economists had forecast.
In everyday life, this has led to an 18 percent increase in the cost of fruits and vegetables last year and an increase in the cost of housing.
Wellington is considered one of the least affordable cities in the world to buy a home, with rents up 12 percent in the last year.
The Reserve Bank of New Zealand has made six consecutive rate hikes and economists are warning there could be three more hikes.
Mr. Liveris said that New Zealand’s remoteness as a country is likely due to its slightly higher inflation rate than Australia.

“Because it’s farther away from places, it’s actually harder to get to it, and so you need to put in more effort. Thus, prices can rise faster when geographic distance needs to be covered.”


Japan has some of the lowest inflation rates of any developed country, with the latest annual inflation rate in June at 2.4%.
“That’s pretty cool, that’s what you want, but saying that, Japan has a pretty complex economy with a very high level of public debt,” Mr. Liveris said.
The man at the ATM.

Japan’s inflation rate has been stable. Source: A MONKEY / SOPA Images/Sipa USA

“They have a problem called stagflation, and they’ve had it for decades, which is basically where things are really stable and still.”

World Bank President David Malpass warned that the global economy could go into stagflation.

The situation that arises from the combination of weak growth and rising prices could cause widespread suffering in poorer countries trying to recover from the shocks caused by the COVID-19 pandemic.