Project report on inflation

The following are the primary causes of current inflation:

• 
  Recreational and cultural activities. The most significant factor is an increase of 4.3 percent in the cost of overseas travel and lodging. This is a direct effect of the Australian dollar's depreciation against the currencies of most popular overseas tourist destinations, resulting in cost-push inflation with little benefit to Australians.
  
• 
  Alcohol and tobacco were the second-largest contributor, owing to higher cigarette costs as a result of tax increases, resulting in cost-push inflation with no real beneficiaries (apart from government and any smokers who quit as a result).
  
• 
  Transportation costs, specifically gasoline expenditures, were the third largest factor, owing to both the weaker Australian currency and the higher international oil price.
  

• Communications, where growing competition in the mobile and internet space resulted in Telstra, in particular, rationalizing their mobile plans, saw the biggest price drops.

• Since the implementation of the new Child Care Subsidy on July 2, the cost of child care has decreased by 11.8 percent. This is only a change in the subsidy, and it has nothing to do with the fundamental supply/demand dynamics.

In general, cost-push inflation appears to be outpacing demand-pull inflation at the present, with the cost-push being fueled by a weaker Australian currency and higher international oil costs. This leads me to believe that there are few positive conclusions to be drawn for any domestically exposed business, but that the Australian dollar's outlook is weakening, which should assist export-oriented businesses.

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