Question: Watch the following video clip, CPI: A surprise jump in inflation to a 2-year-high appears to have reduced the chances of further official interest rate cuts in Australia and answer the following questions.
1. What were the underlying causes of the stronger than expected inflation rate (what goods experienced a rise in price and what goods experienced a fall in price? Thinking about the CPI basket do you think that a rise in these goods would influence CPI?
2. How does the lower Australian dollar contribute to inflation?
3. Explain how the changes in the prices of goods in part a, and the change in the exchange rate might influences the RBA's position on changing interest rates. How does the changes in the unemployment rate moderate this position?