The economy is a dominant issue in the Election. From now until polling day, Independent Australia will outline some key facts on the economy that put the kybosh on many of the myths, lies and distortions being peddled in the election campaign.
This is the eighth in a series of short articles by leading economist Stephen Koukoulas, which will be published daily up until the Federal Election on Saturday 3 May 2025.
FACT EIGHT: AUSTRALIA TACKLED THE POST-COVID INFLATION AND INTEREST RATE SHOCK BETTER THAN COMPARABLE COUNTRIES
The global inflation surge in the aftermath of the COVID pandemic saw the inflation rate in Australia and around the world spike sharply.
The good news is that inflation has eased back and interest rate cutting cycles have begun.
How did Australia fair in the global inflation shock of 2022–2023 and what sort of interest rate response was each country forced to implement?
The following table outlines the facts on inflation and interest rates and shows Australia’s world’s best performance.
Comparison of inflation and peak interest rates
The facts show that Australia withstood the inflation shock better than comparable countries. The peak inflation rate was lower only in New Zealand (by 0.5 percentage points), while peak inflation in the U.S., the UK and the Eurozone was between 1 and 3 percentage points higher than in Australia.
As inflation has tumbled around the world, the latest data show Australia in the middle of the pack.
And this was achieved with the peak interest rates being the lowest of all comparable countries. The peak cash rate in Australia of 4.30 per cent was 0.7 to 1.2 percentage points lower than in all other countries, other than in the Eurozone where peak rates were 0.2 percentage points higher than in Australia.
Australia's economy is well under control and that's a fact.
Other facts in this series:
- #1: In fact, Labor has inflation back under control
- #2: Energy prices are plummeting
- #3: Wage growth on the rise under Labor
- #4: Labor brought down government debt by billions
- #5: Labor building on a better future
- #6: Coalition taxing at a record high, not Labor
- #7: Under Labor, Australia is more productive
- #9: Australia keeping tax down
- #10: Employment rising under Labor
Stephen Koukoulas is one of Australia’s most respected economists, a past chief economist of Citibank and senior economic advisor to an Australian Prime Minister. You can follow Stephen on Twitter/X @TheKouk.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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