International Comparisons
In the 1990s it was widely recognised that the Australian economy was suffering due to high rates of inflation. At that time, the inflation rate peaked at 8% - well above the goal range at the time and significantly higher than the rates recorded by our major trading partners at the same time. This result severely damaged our international competitiveness, and therefore affected the other goals of the federal government.
As a result, a more direct targeting of inflation was implemented. As Australia became a more international economy it was increasingly important to achieve a rate of inflation which would not discourage international investment, and which would allow our export sector to continue to grow.

As a result, it is fair to conclude that the Australian inflation rate compares favourably with that of our major trading partners during the last three years. However, external pressures during 2008 created some concerns for the Australian economy. While the commodities boom has helped to ensure that incomes are rising, it is also contributing to the increasing rate of inflation. As prices increase, international buyers are more likely to try and source their commodities from other sellers. Australia's proximity to Asia has been beneficial so far; this country is still seen as the best place to source fuel (such as natural gas and coal) and raw materials (such as iron ore) because the delivery times are relatively short and the costs are minimised.
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