The worst of the credit crunch is over, however inflation is the next problem on the horizon for Australians, according to Praemium chair Don Stammer.
"Inflation will start to become a problem for Australia if energy and food prices keep going up, and/or if wage increases accelerate to incorporate the one-off increases in price levels we have had to date," Stammer said at the Association of Superannuation Funds of Australia lunch in Sydney yesterday.
"If things don't work themselves out, we could have a problem that is seriously dislocated to the world economy, investment markets and particularly self funded retirees," he said.
The share market is starting to get the confidence to go its own way and remarkably, commodity prices are now seriously decoupled from the US economy, according to Stammer.
"Now that confidence is starting to come back into credit markets, you're getting a revaluation upwards of some of those credit products. I'm not saying it's going to be an easy road, but the worst of the credit crunch is over," he said.
When analysing the budget and what it means to the economy, Stammer predicted that if the cash rate is to plateau and if inflation eases, then by the end of 2009 the cash rate will fall.
The budget also failed to address the problem of longer living retirees, according to Stammer.
