The whole world is wondering at the economic strength of Australia since 1990. What is the secret? That is what everyone wants to know. Well folks the reforms on inflation in 1990’s are bearing fruit now. When the whole world was struggling with rising prices Australia was happy and rich. Australia has now one of the highest living standards in the world and has not seen depression for close to three decades now.
The past 25 year average inflation is 2.5% which is incredibly low for a growing economy. How does low inflation help the economy? It helps the middle and lower-income level people. They have more disposable income which they can use to raise their standard of living. This increase in purchasing power means economic upliftment which is continuous. This is the main reasons why an average Australian has a good lifestyle. The growth in wages has been more than inflation leaving the people a bit richer.
Another benefit of low inflation is lower lending rates. Availability of credit at lower rates means a better environment for new business. The debt is cheaper and this leads to more profit being made. This profit then ultimately is positive for the economy as a whole. This small step taken in 1990 has made Australia the healthiest economy of the world. An example that can lead to reforms in other countries.