Business
Weak inflation tells us: it’s the demand side, stupid – Sydney Morning Herald
Despite the remarkable 1.9 per cent fall in the consumer price index (CPI) in the June quarter, we face no imminent threat of deflation.
Even so, all the other prices in the CPI basket of goods and services rose during the quarter by just 0.1 per cent. People are reluctant to buy during recessions, so businesses dont raise their prices for fear of selling even less. Its a safe bet inflation will stay negligible for as long as the recession lasts and for as long as it takes the economy to recover.
Trouble is, we had unduly weak price growth long before the coronasession. Our rate of inflations been below the bottom of the 2 to 3 …
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