Confusion for Australia's
consumers.
by MEDIA CONTACT RESOURCES, INC.
Here are two lead paragraphs from stories published within three
days of one another by highly respected news organizations.
The first is from the Australian Associated Press (AAP) and it is
dated May 2, 2006. "Inflation should remain under control in
Australia despite higher petrol prices, a new report has
predicted."
The second is from the Financial Times (London) via Yahoo! News and
it is dated May 5, 2006. "The Reserve Bank of Australia, the
country's central bank, on Friday forecast that inflationary
pressure would remain high but stopped short of predicting another
imminent interest rate rise."
A third story worth mentioning-reporting on the rate rise by
Australia's central bank on May 3, 2006-was also from the AAP, and
it quoted the head of the Australian Council of Trade Unions (ACTU) on
the impact on the country's consumers. She said, "The pressure
on working families is frightening," (The story is dated May 8,
2006.)
As Market: Asia Pacific mentioned in a "Country Focus"
last month (15:4) Australia has a fundamental problem in that its
consumers are not participating in the growth represented by its GDP.
Per capita income is nearly flat, and economic growth is being measured
chiefly by business expansion. Consumers have been spending but only
because, until now, they have had access to reasonably priced credit.
The head of the ACTU appears to acknowledge the contribution to
growth by Australian business, and at the same time she recognizes the
squeeze on consumers created by the conflicting views of inflation in
the economic establishment. " . . . For the first time ever, the
cost of housing and transport has outstripped the cost of food for the
average family," she said.
Consumer spending appears to be discounted as a driver of growth in
Australia. The problem is further exacerbated by Australia's new
labor laws, which introduce an element of flexibility into the hiring
and firing process. This reform is much sought in any economy, but in
Australia is comes without a significant, parallel investment in human
capital, such as enhanced retraining.
MARKET FOCUS:
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Copyright 2006, Gale Group. All rights
reserved. Gale Group is a Thomson Corporation Company.
NOTE: All illustrations and photos have been removed from this article.