What if next week’s CPI numbers aren’t actually about inflation, but rather the system we’re using to control it, which is starting to break? Wednesday, April 29, could mark a major turning point for Australia, not because of the number itself, but because of what it forces policymakers to admit.
Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.
For the past two years, the playbook has been simple: Raise rates, slow demand to bring inflation down. But next week’s CPI lands at a time when inflation is no longer being driven purely by demand. It’s being shaped by forces we can’t easily control, such as energy dynamics, global supply chains, and structural constraints within Australia’s economy. That’s what makes the release of next week’s data different.
If inflation comes in hot, the default response is to keep interest rates high, and maybe even push them further. But here’s the problem: higher interest rates don’t produce more energy, fix housing shortages, or improve productivity. They simply compress the parts of the economy that are still functioning. In other words, policy risks becoming misaligned with the problem it’s trying to solve.
For everyday Australians, this is where the real shift is happening. It’s no longer just about higher repayments or cost-of-living pressure; it’s about the structure of the economy changing underneath them.
If rates stay high to fight supply-driven inflation, growth starts to slow. Investment weakens, hiring slows, and the economy loses momentum in places unrelated to the original cause of inflation. That’s a very different environment from what people are used to, one where things don’t collapse suddenly but quietly stagnate.
On the other hand, if CPI shows signs of easing, it creates room for policymakers to pause, but even that comes with a catch. A pause doesn’t fix the underlying issues either; it just delays the adjustment.
That’s why next week’s CPI numbers matter more than most. It’s not just a read on inflation; it’s a test of whether the current strategy still works or whether Australia is heading into a period in which inflation remains elevated while growth slows anyway.
That’s the uncomfortable scenario no one wants to say out loud. Because if that’s where we’re headed, the implications are bigger than interest rates. It reshapes how Australians invest, businesses plan, and how the economy grows over the next decade.
So, when this number drops, don’t just look at whether it’s higher or lower than expected. Look at what it forces the RBA to do next, because that decision will tell you far more about the future than the inflation figure itself.
Good luck and good trading.
Join the discussion: See what’s trending right now on Australia’s largest stock forum and be part of the conversations that move the markets.
Dale Gillham is Chief Analyst at Wealth Within and an international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au.