The rise in inflation in Australia in the first quarter was good news as it suggests the period of very low inflation is now over. But it is also bad news as it means prices are now rising faster than wages. And the resulting squeeze on real wages is being driven by price rises of items that households have to buy. Our measure of essentials inflation has risen to 3.4%, while luxuries inflation is languishing at just 0.6%. It’s costing much more to live, but not much more to have fun!
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