The dreaded I word - INFLATION

Inflation is the hot topic that, unless you’ve been living under a rock, you’ve probably heard a little
bit about. Similar to how toilet paper hoarding did in March 2020, the term now appears to be
incorporated into every dinner table discussion.

Treasurer Jim Chalmers has warned of a “big and widening” gap between the Reverse Bank of
Australia’s cash rate and other global central banks driving the Aussie dollar further down, pushing
inflation higher and forcing interest rates to rise than expected ( This is after the RBA raised interest
rates by 25 basis points on October 4 th to 2.6% – the fifth raise in as many months)

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“We are facing economic pressures, the likes of which have not been seen since the 1980s.” – Gavin Ord

A basic guideline is that for every 100 basis points of increase in the cash rate coverts to around
$300 per month in extra repayments on your typical 25-year home loan.

Another call for concern is the annual inflation which has been hovering around 7% in recent months
and the central bank and the federal government have said they expect it to peak below 8% by the
end of 2022.

In the US, More Americans searched for “inflation” on Google in August than any other month since
2004. This makes great sense given that the CPI showed little evidence of decreasing that month as
it remained close to a 40-year high.

But here’s something you might not be aware of: Even the higher income earners are being forced to
count down the days until payday due to persistent price increases in virtually every area of the
economy.

Approximately 45% of those earning over $100,000 reported they were living paycheck to paycheck
in August, an increase of seven percentage points in less than a year. In addition, over 20% of
consumers making over $200,000 said they lived from one payday to the next.

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The pinch of inflation is being felt by almost everyone around the globe.

In the UK where the IMF has issued a warning that Britans high level of inflation
will persist longer than almost all other advanced economies. UK inflation will also be the highest in
the G7 at the end of 2023 with only Slovakia having a higher inflation rate by the end of 2023 in the
19-member eurozone.

These are testing times for everyone, so be kind and gracious. Help one another, you don’t know
what they are dealing with.

If you are worried about how inflation might affect you or wanting to find ways to overcome and
empower your money and your financial security, chat to the Novaturient team for some comforting
words of wisdom.

 

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