THE GLOBAL economy is going through its most significant period of inflation since the early 2000s and ongoing concerns surrounding the Ukraine conflict will continue to weigh heavily on the market.
However, ANZ senior economist Catherine Birch said Australia was well positioned to ride out the storm.
Speaking at the Australian Grains Industry Conference Ms Birch said in spite of official Australian Bureau of Statistics data showing a 6.1 rise in prices in the June quarter, the highest since 2001, there were strong signs of resilience in the economy that could suggest the nation was close to the peak of the inflation curve.
"A key thing is the good employment prospects," Ms Birch said.
"If people have a job or could find one quickly it is a big plus," she said.
"In the last figures there were 480.000 job vacancies, easily a national record and at ANZ we don't see that deteriorating any time soon."
She said the thirst for workers was even more pronounced in rural and regional Australia.
"The gap between supply and demand is larger in the regions."
But while Ms Birch was relatively upbeat in her forecasts she said international factors could still have a negative impact.
In particular she said the conflict in Ukraine was a wildcard, with the potential for Russia to put Europe through more pain by restricting critical gas supplies in retaliation for their support of Ukraine and also manipulating the flow of Ukrainian grain onto the market, with energy and food inflation both particular concerns for a number of countries globally.
Ms Birch said supply chain disruption had played a key role in the wave of inflation.
"Supply chains just can't keep up and that is not only with globally exposed goods and services but domestic as well.
"We've seen an extraordinary lift in demand which comes about because of the extraordinary monetary policy we've seen across the world over the pandemic."
Locally, she said Australia had been subject to significant shocks including COVID-19, the floods on the east coast and the war in Ukraine.
"The climate variability is emerging as a significant factor for a lot of industries in Australia and not just agriculture."
In terms of all-important Reserve Bank of Australia (RBA) interest rates, Ms Birch said she expected the RBA to lift rates to 3.35pc by November, which is higher than what was previously anticipated.