Australia's Economy Grows, but Inflation Persists

0:00Stay in form in two minutes or less with Sydney News Today from the Daily News Now. Australia's economy showed some positive signs in the latest national accounts for the December quarter. Gross domestic product grew 0.8 percent in those three months, pushing annual growth to 2.6 percent. That's the strongest yearly figure in nearly three years and beat the Reserve Bank's forecast of 2.3 percent. Thanks partly to revisions. In earlier data, household spending, the biggest driver of the economy, rose 0.3 percent, fueled by essentials like health costs during flu season and fun, stuff like tourism, cafes and big events. But people are saving more too, with the saving ratio hitting 6.9 percent, the highest in over three years. Government spending jumps 0.9 percent, adding some extra push to growth. Treasurer Jim Chalmers called the results outstanding on radio this week. Still, critics point out weaknesses, like sluggish productivity that's keeping the economy running hot,

1:02despite slow overall growth. That mismatch means more demand on limited resources, which fuels higher prices. Even GDP per person improved to 0.9 percent over the year, a better sign for living standards. But parts of the economy remained shaky, with low productivity growth putting steady pressure on inflation. The Reserve Bank stays worried, as inflation lingers above their 2-3 percent target. Officials like Governor Michelle Bullock might stick to higher interest rates, or tough talk to cool things down, balancing growth against price rises. Quick thanks to today's sponsor, see the description for more.