Inflation, why so important?


Inflation has been a hot topic for investors throughout 2021 and will continue into 2022. For many years policy makers have sought a small stable level of inflation, a level that contributes to sustainable economic growth. In many developed markets this has typically been targeted at around 2% per annum, a level low enough to encourage stable prices and investment by businesses, but not too low as to discourage spending or result in low or negative real wage growth.

Since the 1970s, strong population growth and demographic trends has resulted in the core focus of Central Bankers being the control of inflation. However, post the Global Financial Crisis saw the emergence of a new issue for maturing economies to deal with, persistently low inflation and stagnating wage growth.

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Most income streams are sourced from account based pensions and insurance companies (annuities) with the same and concessional tax structure for both.
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The rate of social security payments are affected by an asset and income test. Generally, the test that results in a lower payment is what determines the rate payable.
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