INTERNATIONAL COMPARISONS

National rates of inflation influence many aspects of international trade and investment. High or volatile rates of inflation can influence decisions on international trade and investment compared with nations with stable low inflation which present a lower risk. Therefore in analysing price movements in Australia, an important consideration is Australia's performance relative to other selected countries.

Using an internationally comparable definition of CPI in 2008-09, the annual rate of inflation in Australia was 2.4%. This was below New Zealand (3.2%), the United Kingdom (3.8%), South Korea (4.4%) and Indonesia (8.9%). However, the 2008-09 annual rate of inflation in Australia was higher than Japan (0.6%), the United States (1.2%), and Canada (1.2%).

Between 1998-99 and 2008-09, the average annual rate of inflation in Australia was 2.8%. This was similar to that in the Republic of Korea (3.3%) and the United States (2.6%). In contrast, there was overall deflation in prices in Japan during this time with the average annual rate of change of prices being -0.4%. The largest growth in prices occurred in Indonesia with an average annual inflation of 8.5% between 1998-99 and 2008-09 (Endnote 1).