Powered by MOMENTUM MEDIA
subscribe to our newsletter

Deflation fears likely to ease: NAB

A stabilisation of commodity prices at low levels could be the catalyst for a resurgence of inflation in developed economies, according to the major bank.

A new report by NAB Group Economics said 2016 could finally put deflation fears within developed economies to bed, pointing to International Monetary Fund projections that 2015 (and 2014) saw inflation in developed economies at 20-year lows.

“[Inflation] is also low in Australia, even for tradable goods and services despite more than 20 per cent depreciation of the Australian dollar in trade-weighted terms since February 2012,” NAB said.

“Some of the disinflationary pressure has stemmed from lower oil prices which are likely to be stimulatory to activity in the medium term.”

The report said much will depend on commodity prices in 2016 as well as the degree of spare capacity and aggregate demand across the global economy.

Advertisement
Advertisement

“We expect commodity prices to stabilise at low levels which should produce higher inflation as fuel price falls in particular drop out of the calculations, and associated input costs stop declining,” it said.

However, any increase in global inflation will be “moderate”, NAB said.

“The global economy is lacklustre, while high unemployment will continue to suppress wages growth,” it said.

“Structural factors – rapid technological change, automation and population ageing – may also act to keep inflation low.”

[Related: Economic recovery faces ‘major risks’]

PROMOTED CONTENT


Deflation fears likely to ease: NAB
mortgagebusiness

Latest News

Risks to financial stability could be building as house prices and debt levels keep rising, the Reserve Bank has cautioned. ...

The big four bank has unveiled its response to past regulatory issues, a program meant to improve its risk management and accountability.  ...

The proposed acquisition of Westpac PNG and Westpac Fiji by Kina will no longer proceed, it has been confirmed. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.