The dramatic lowering of the global inflation outlook over recent months is a sharp reminder of the folly of forecasting anything on the basis that prices will always go up.
Exhibit A: this Australian ad from 1987, predicting what a range of consumer items would cost in 2010, based on a steady inflation rate of 8 per cent!
It was posted to Reddit Australia by jocorga and is purportedly an Adelaide ad encouraging people to plough more money into their superannuation.
Where to start? Let’s go with the cheese sandwich. It’s probably between $5 and $8 nowadays.
Thanks to the dramatic expansion of airline competition you can get a return flight to London for less than $2,000 and $8,800 might even get you business class.
A man’s suit can easily be found for less than $350, and a kid’s bike for under $100.
And so on. Despite the ad’s protestations, it is complete “pie-in-the-sky”.
Some figures are notable underestimates in the ad, which was printed five years before the introduction of compulsory superannuation in Australia: housing, and the pension. The median house price in Adelaide – one of the quieter corners of Australia’s famously expensive property market were over $400,000 in 2010. And the pension rose faster than expected – something the government is wrestling with now – and stands at just under $777 for a single person.
Two observations from this: (1) believing the way things are now is the way things will be in the future is foolish, and (2) Australian property prices are vastly out of whack with the cost of living.
Even in Adelaide.
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