Key Points
- Australia's annual inflation sat at 7 per cent as of March 2023.
- Prices in Argentina have doubled in the past year.
- Annual inflation is less than 3 per cent in Switzerland.
Australians may be hyper-aware of the nation's inflation due to its impacts on every aspect of life, but where do we sit compared with other countries?
When the raw percentages are stacked up side by side, there are some big variances.
But as macroeconomics professor at the University of Sydney, Mariano Kulish, explained to SBS News, each economy needs to be considered within its own context.
Australia's inflation situation
Over the past year, many Australians have come to have a new understanding of inflation.
After reaching a 32-year high of 7.8 per cent in the December quarter of 2022, Australia's annual inflation sat at 7 per cent as of March 2023.
Australians have been grappling with the rise in the across most aspects of life including and
Professor Kulish said as with other advanced economies, Australia provided economic stimulus as part of its response to the COVID-19 pandemic. That, coupled with supply disruptions, has meant very high inflation and low unemployment.
"And now the economy is trying to go back to normal, normal being rates of unemployment which are close to a natural rate, and an inflation rate within the target ranges," he said. Australia has an official inflation target rate of 2-3 per cent and the Reserve Bank of Australia has been
While Australia's inflation rate is more than double that of many other G20 countries (a group of 19 countries plus the European Union), it's still well below some others. Here's a look at how some are faring:
Source: SBS News
Argentina's high inflation
Argentina, like Australia, is part of the G20, so is considered to have one of the world's largest economies.
While Australians may have noticed a gradual increase in the cost of items on the grocery store shelves over the past year, for those in Argentina, noticeable price rises can be seen each time they go to the shop.
Argentina has experienced 104.3 per cent annual inflation up to March 2023, meaning people's purchasing power has effectively been cut in half.
Retiree Juan Tartara told Reuters that prices spiked with each of his weekly visits to the store.
"For now, every trip to the supermarket is a reminder of the country's inflationary crisis,” he said,
"Sometimes food increases 10 per cent or 15 per cent. In one year, beef went from around 1,000 pesos or 1,200 pesos to 2,800 pesos."
The soaring prices and depleted spending power means 40 per cent of Argentinians are considered to be now living below the country’s poverty line.
While there may be a change in the country's approach to economic management after the general elections in October, Professor Kulish said even if such changes occurred, it would take some time for inflation to come down significantly.
"Argentina as a country needs regime change, and needs a framework to really get inflation under control and they don't have that," he said.
The cost of living has doubled in the past year for those living in Argentina. Source: AAP / Juan Ignacio Roncoroni/EPA
Mr Kulish said a lack of confidence in the Argentinean peso had meant for decades much of the economy had relied on the use of US dollars.
What made the United Kingdom's economy vulnerable?
Like Australia, the United Kingdom implemented a number of economic stimulus measures in response to the onset of the COVID pandemic.
Professor Kulish said those injections into the economy were among the factors that led to inflation in both countries being driven up.
"There were a lot of uncertainties and it turned out to be a shorter economic contraction than maybe we were anticipating at the very start of COVID," he said.
"The stimulus was very large, I think predicated on the uncertainty and trying to avoid worst-case outcomes."
The UK's annual inflation rate however is higher than Australia's and as of March sat at 10.1 per cent.
"I think in their case, it's probably more related to their exposure to the Ukraine situation and their dependence on energy from that region, whereas much of the rest of the world is more insulated from that," Professor Kulish said.
Switzerland's starting point
Switzerland has one of the lowest annual inflation rates of all G20 countries, second only to China.
As of April 2023, the annual rate of inflation sat at 2.6 per cent.
But the Swiss economy has long been quite a stable one due to the country's overall wealth and the Swiss Franc has traditionally been considered a safe haven asset, sheltered from much of the volatility of the wider market.
In 2019 before the pandemic, Switzerland’s economy experienced inflation of 0.36 per cent while Australia’s annual inflation rate that year was already at 1.59 per cent.
“They have had a lower target to begin with, so then when the inflation shock happens, now, they're not going to peak at such a high level because they are already starting from a lower base,” Professor Kulish said.
Economic management evaluated at the polls
While Türkiye's current inflation rate sits at 43.7 per cent for the year, it is actually on a downward trend, having peaked just over 85 per cent for the year ending October 2022.
The nation's cost of living crisis is expected to have had an influence on how people voted in Türkiye's federal election, for which a result is expected to be known on Monday.
Political commentators have said President Recep Tayyip Erdoğan's presidency could be at stake as a result of how his government had handled the economy.
People in Türkiye trying to deal with an inflation rate at least six times higher than Australia's. Source: Getty / Burak Kara
Ups and downs from nation to nation
Inflation in Germany is at a similar level to Australia, sitting at 7.2 per cent in April, down from 7.4 per cent in March.
Among the products that are costing more for Germans lately are dairy products, for which prices have risen by 34.8 per cent.
While the cost of energy in many countries continues to climb, in the US the cost of energy actually went down by 5 per cent.
Some have at least attributed part of this decreased cost to a milder winter.
Inflation in the US continued to ease to 4.9 per cent in April, the lowest it has been since April 2021.
Getting Australia's inflation under control
Most Australians would have noticed the rising cost of everyday goods and services. Source: Getty / Bloomberg Creative Photos
"If the RBA keeps pushing interest rates up, demand is going to pull back and unemployment is going to rise," he said.
"It is difficult for the RBA to say that but that's what needs to happen if inflation is going to go back into the target band."
