Inflation and the cost of living: Policy debates and practices

This paper examines some of the reasons why governments approach inflation the way they do and surveys some recent contributions to the policy debate. On July 27, the Australian Bureau of Statistics announced that in the June 2022 quarter, the consumer price index rose by 6.1%. Australia’s March inflation rate of 5.09% was already high, although not as high as in many other economies. Considerable attention is now focused on the range of price spikes that has accompanied the recovery of the world economy in the aftermath of the COVID-19 pandemic. Governments and institutions have a limited range of policy options. State governments can contribute and, some already have proposed modest ‘cost-of-living’ alleviation measures – mostly targeting household energy bill assistance.