Aussie's Slide Spurs Weakest Inflation Response Since Float
- Since July 2011, currency dropped 38% while CPI rose 8%
- Australia importing low inflation keeps RBA easing talk alive
Australian one-hundred dollar banknotes are arranged for a photograph in Sydney, Australia, on Wednesday, April 17, 2013. Direct trading between the Australian dollar and yuan started on April 10.
Photographer: Ian Waldie/BloombergThis article is for subscribers only.
It used to be a simple mathematical proposition. When a country’s currency tumbled, its consumer prices would rise as the cost of imported goods climbed.
When Australia embraced a flexible exchange rate in 1983, that’s certainly what happened. The consumer price index soared 16 percent as the local dollar depreciated 38 percent from March 1984 to July 1986.