5 reasons why Australia’s inflation rate will not follow the US uptick
The latest US inflation figures came in hotter than expected
2 min
Inflation in Australia is unlikely to follow last week’s surprising uptick in the United States, according to AMP deputy chief economist Diana Mousina. US inflation increased 0.4 percent in March, pushing the yearly inflation rate to 3.5 percent, up from 3.2 percent in February. This is well above the US Federal Reserve’s 2 percent target, and prompted analysts to push back their predictions on the timing of a US interest rate cut. The official US cash rate range is currently 5.25 to 5.5 percent.
Australian and US inflation are now at similar levels. Our annual inflation rate is currently 3.4 percent, as per the monthly report for February. The rate was the same in January. Ms Mousina said Australian inflation peaked in December 2022, which was about six months after the US economy. While analysts have been watching US trends ever since for insights as to what may happen here, Ms Mousina said it was unlikely that Australia would also record an uptick in inflation for March.
“… we think Australian inflation will see a further slowing from here, unlike the recent pattern in the US,” Ms Mousina said. There are five key reasons for this, starting with how domestic conditions in the US and Australia have been impacted differently by monetary policy. Firstly, most US home loans are on long-term fixed interest rates. Most Australian mortgages are on variable rates, so mortgage repayments have lifted considerably and eaten into household budgets for living expenses.
“US outstanding mortgage rates have risen by 0.5 percentage points, compared to 3.2 percentage points in Australia. This is despite Australia increasing interest rates by 1 percent less than the US. As a result, households are in worse shape in Australia than the US.”
Ms Mousina said retail trading, real household disposable income and consumer confidence were down in Australia but rising in the US. “A softer consumer weighs on spending and inflation,” she said.
Ms Mousina also said high US wages growth was keeping services inflation elevated. Australian wages growth has also increased, to its highest level since 2009, but is likely to taper off from here. “… the unemployment rate is expected to lift as labour demand has slowed,” she said. “Softer wages growth in 2024 will see a softening in services inflation.”
Prices in regular US price surveys have recently recorded an uptick, while prices in Australia have been trending down. Additionally, Australian pipeline inflation pressure, which gives a four-month lead on inflation trends, continues to head lower. Pipeline pressure is measured using energy and agricultural commodities prices, shipping rates, price surveys, advertised salaries on Seek and the China Producer Price Index. “… when we look at our Australian pipeline indicator, there is still a further slowing in inflation likely to occur, whereas progress in the US inflation indicator has stalled,” Ms Mousina said.
The last reason why Australia is unlikely to record an uptick in inflation is technical differences in the measurement of inflation between the two countries. The US CPI data has a high weighting to housing at 33 percent, including both rents and ‘owners’ equivalent rent’ which reflects property values. In Australia, only rents are included in the CPI index, with a weighting of just 5.8 percent. “Both rents and owners’ equivalent rent have had high inflation in the US,” she said. “If Australia had a higher weighting to rents, then services inflation would remain higher for longer, as very elevated Australian population growth is keeping rental inflation high.”
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4 min
Aston Martin builds all of its cars with a peak blend of performance and luxury. Still, their six-figure creations can lean more aggressively into one side or the other of that simple recipe.
For example, the DBD707 SUV hides a 4-litre V8 engine capable of 697 horsepower, but its overall size and endless creature comforts nuzzle a little closer to luxury’s embrace. The small-batch Valour muscles up on the performance scale with its prized manual transmission and 5.2-litre, 705 horsepower V12 power plant. Meanwhile, the recently redesigned DB12 is the company’s best attempt at splitting the performance-luxury gambit right down the middle.
Amid all of those supercar machinations, the Aston Martin Vantage sneaks away to play as the most performance-centric car coming out of the Gaydon, England, factory. Redesigned for 2025, the US$191,000 coupe reasserts itself as the most dedicated “driver’s car” in a very driver-friendly line. Should this be in pounds first?
During a road drive and speed testing event at Spain’s Circuito Monteblanco about an hour outside of Seville, the new Vantage proved itself as Aston Martin’s most accessible track-day companion.
A first look at the latest addition to its very elite Warwickshire family pulls the eyes right to the newly extended rear wells that jut out around 21-inch, forged alloy wheels. While widening the car’s haunches, the wheel positioning reduces unsparing weight and gives the new Vantage a much more athletic pose.
Beyond that muscular base, the Vantage continues the modern Aston Martin styling tradition of riding the razor’s edge between aggression and sophistication. While the car’s Italian and Swedish rivals opt for prominent fins and big scoops, Aston’s designers keep the lines low, wide, and balanced from the signature highlighted grille to the understated aerodynamic spoiler.
In the performance specs department, the Vantage now packs an AMG-built, 4.0-litre, V8 twin turbo, front-mid mounted engine, capable of 656 horsepower, and a top speed of 202 miles per house and a 0 to 60 mph time of 3.4 seconds.
According to James Owen, Aston Martin’s senior manager of Vehicle Engineering, if the DB12 is the automaker’s distinguished overachiever, the Vantage is its less responsible, but equally attractive pugnacious sibling.
“The DB12 is a sports tourer and is positioned in the market as a GT,” Owen says. “It’s important for us to differentiate between Vantage and the DB12—to make sure that difference is clear for buyers and enthusiasts”
Owen describes the larger, pricier DB12 (starting MSRP of US$245,000) as more refined, while he considers the 2025 Vantage as playful and passionate. He even uses the word “brutish,” if such a term can be used for a technology-stuffed, six-figure sports car.
“The word that we keep hearing when talking about the Vantage is ‘fun,’” Owen adds. “That’s what we wanted to hear. We wanted to create a car that pulls at the heartstrings because it’s so enjoyable to drive. But, we wanted it to have a challenging character to it.”
Previous versions of the Vantage fit that punkier image. While always built for speed and powerful acceleration, the last couple editions of the Vantage were a little more harsh. The steering seemed more aggressive—demanding more input from the driver. The suspension felt tighter, deliberately transmitting more of the road’s surfaces and imperfections into the driver’s backside. If any current car in the Aston Martin line is a direct descendant of the automaker’s racing pedigree at Le Mans or in F1, it’s the Vantage.
Still, amid all this talk of driving fun and racing performance, Owen is quick to remind drivers that the Vantage is still an Aston Martin— steeped in the company’s signature identity of sophistication as the grownup’s more dignified supercar.
“The Vantage also has that added feature in its wheelhouse,” Owen explains. “Yes, it will respond to a driver pushing it in a racing scenario, but—with the technology we built into the car to stabilise the body at its most comfortable driver mode settings – the Vantage is still a very pleasant place to be.”
In keeping with such pleasantness, the interior of 2025 Vantage bears no resemblance to any race car. Handmade and stitched Haircell Leather stretches in all directions in any colour the buyer prefers. The Sports Plus Seats are 8-way adjustable with heat or cooling on demand. The complete infotainment suite featuring the official Aston Martin Audio system from Bowers & Wilkins is a step up from the previous Vantage (and the current DB12).
Once the internal comforts and engineering feats come together, the experience behind the wheel is a sensual union of car and operator. Acceleration is smooth, yet immediate. The cornering is focused and nimble, and its rear-wheel drive allows for just enough play for the occasional drift at speed in turns.
A key piece of Aston Martin technology makes the Vantage’s elite performance potential accessible to more drivers. The ESP System (Electronic Stability Programme) debuted in the DB12, and the Vantage adopts the tech to its driver mode system. ESP takes information from multiple sensors around the vehicle, feeding the accelerometer data into a computerised concept of the car’s driving conditions and the ability of the operator.
Resulting algorithms react to those conditions, road surface issues, available grip, etc., tightening up the vehicle where necessary to aid the driver and offer as much feel and performance as the given operator can manage.
In its completed package, the 2025 Vantage is aimed at a specific buyer demographic—the driving enthusiast who puts thrills ahead of all-out creature comforts.
“For each project at Aston Martin, we have a customer profile in mind,” Owen says. “They have defined interests that highlight their demographic. For the Vantage, we consider a buyer who is perhaps new to the brand and looking into the ‘entry level’ Aston Martin. That’s a buyer who isn’t concerned with having a backseat or the DB nameplate. He or she thinks performance first and foremost.”
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