LONG TERM INFLATION TRENDS

Levels of inflation in Australia are influenced by a range of local and international factors. From the mid-1950s to the late 1960s, the level of inflation in Australia remained relatively low until a sharp rise in the first half of the 1970s. This was influenced by higher oil prices, wage growth and other factors. These inflationary pressures persisted into the 1980s, partly due to a second oil price shock, and although at relatively high levels, inflation was fairly stable during the 1980s (EPAC 1990). By the 1990s, the rate of inflation had slowed with falling world prices of cars and computers contributing towards lower inflation (Treasury 1999). During the 2000s, inflation remained stable at around 3% with the only significant change to inflation occurring during the early part of the decade due to changes to Australia's tax system.