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ECONOMIC OBJECTIVES - INFLATION Inflation is a rise in the general level of prices of commodities Inflation is a major economic issue in Australia and is one which requires stable management for durable and long-term improvements Low inflation and steady economic growth have emerged as outstanding economic achievements this decade Along with unemployment economic growth and external viability inflation acts a major economic indicator illustrating the strength and stability of our economy It is for this reason that inflation management has played such a great role in domestic economic policy over the last decade Inflation at present is the focal point of the Australian economy Inflation is at an unprecedented low which has acted to keep the Australian economy competitive Economic policy in Australia has acted to keep inflation low which has been a traditional problem for decades At present Australias underlying inflation rate is less than 13 which has opened up a stronger more competitive export market With such a pleasing outcome for inflation Australia can reap the rewards through lower interest rates as well as economic growth and job increases Low inflation does more than simply slow price increases it acts as an expansionary booster to the economy and a stimulus for other economic objectives In recent times low inflation levels have characterised the Australian economy The underlying inflation rate was only 11 to June 1999 and this has meant further stability of prices and continued growth This result has come on the back of Australias Inflation Target set by the Reserve Bank RBA in 1993 This has acted as a guide to spending and domestic monetary policy over the course of the economic cycle The RBA has set an underlying inflation target of 2-3 per year and this has contributed to our steady inflation performance In the late 1990s Australia has operated at the lower level of this target and this has pleased the government and the
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