Dispelling dollar gloom on the inflation horizon

Fears the falling Australian dollar will automatically lead to a spike in inflation are misguided – the relationship between our currency and consumer prices is more complex than this.

One of the fears from the worrywarts in financial markets is that the recent dip in the Australian dollar will underscore a lift in inflation.

The Australian dollar has fallen by more than 12 per cent over the last two months and this morning is getting close to a fresh three-year low just under $US0.9150.

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