Managing inflation
What does inflation do to your money and how can you factor it into your financial decisions? Inflation looks to be a key financial risk to watch for the remainder of 2022, with Australia’s Consumer Price Index ( CPI ) currently sitting above the Reserve Bank’s maximum target rate of 3%. 1 Below, we explain a bit more about what inflation is, why you may or may not need to be concerned, and how to factor higher than usual inflation into your financial decisions. What is inflation? According to Australia’s central bank, inflation is the rate of change in the prices of goods and services that households typically buy. It’s measured by CPI, which takes into account the retail prices of thousands of items falling into 11 groups, including housing, food, recreation and transport.
Consumer price inflation*
Excludes interest charges prior to the September quarter 1998: adjusted for the tax changes of 1999-2000. Sources: ABS: RBA
%
%
Year-ended
4
4
3
3
2
2
1
1
0
0
Quarterly (seasonably adjusted)
-1
-1
-2
-2
1996
2001
2006 2011
2016 2021
8 • Viewpoint Edition 2 2022
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