The inflation rate or CPI (consumer price index) is a way of measuring how fast things get more expensive. Inflation was at a high last year and is finally nudging into the Reserve Banks' target band of 3 to 6 percent, falling 0.2%. This is welcome news and might cause consumer sentiment to swing more positive introducing a stimulus to spending. If you know things are not getting as expensive as you thought they were you can plan your budget in light of that. So what were the main factors in the inflation rate change?
- Housing and Utilites increased
- Alcohol and tobacco increased
- Food price inflation decreased
Housing and utilities remain an issue contributing a 3.3% increase to the inflation figure. Petrol is also expected to go up soon due to currency fluctuations. These will factor into the next set of CPI figures, but there effect will be felt over that period that the next set of figures will measure. CPI always trails reality so what the figures say applies to the period over which they were collected. This by definition has already happened so where we are today is not what the figures say, they say where we were yesterday.
CPI figures give an indication of where we have come from so that we can better plan what will come next. Planning your budget allows you to stay on top of any expected changes, if you know that housing and utilities are going up faster than other goods then you can allocate a greater portion of your income to paying your rent or your homeloan. If you are a big spender on petrol then you can expect to pay more at the pump and also plan your budget accordingly. The important thing is to be able to get a sense of what is most likely to cost more next month and be prepared for that.
No comments:
Post a Comment