The Daily Aus Is the economy... calming down?
Aug 3, 2025
Greg Jericho, Chief Economist of the Australia Institute, dives into the latest inflation data, revealing it’s at its lowest in four years. He discusses the implications for interest rates, hinting at an anticipated cut by the Reserve Bank of Australia. The conversation also highlights the complex relationship between falling inflation and the persistent cost of living burden, especially for younger generations. Jericho further unpacks how cash rate decisions impact consumer borrowing and examines Australia’s economic outlook amidst global tariff changes.
AI Snips
Chapters
Transcript
Episode notes
Inflation Slows Significantly
- Inflation in Australia has slowed dramatically to 2.1% annually, near the Reserve Bank's target bottom range.
- Five capital cities experienced inflation below 2%, reflecting generally slow price increases across the country.
Low Inflation Reflects Weak Spending
- Inflation below 2% might seem good because prices don't rise much, but it reflects weak consumer spending.
- Businesses can't raise prices if customers are scarce, potentially suppressing economic growth.
Milk Prices Illustrate Cost-of-Living
- Milk prices illustrate price stickiness: after rising from $2, they rarely fall back.
- Rising rents and stagnant wages mean many Australians still feel cost-of-living pressures despite low inflation overall.