Influence of Inflation on Investment Behaviour in Australia

BUSN20019: Professional Project
“Project Title - Influence of Inflation on Investment behaviour in
Australia”
1

Executive Summary
The main purpose and aim of this project study are to examine the impact of global inflation
among the Australian investors. Inflation is known as the rate at which the prices of products and
services increase and thereby, the power of money decreases (Sousalis, 2017). Australia’s
Reserve Bank’s policies and procedures on the inflation have aim to keep it low which in
between the average of 2-3% (Sousalis, 2017). This research study has been conducted in order
to identify various impact of inflation on the investment behaviour in Australia. For gaining in-
depth knowledge and skills the stats of past 10 years starting from 2007 to 2017 has been stated
in the reported study.
The stats presented in project study reflect over the co-relation in between the rate of inflation
and its significant impact on investment spending in Australia. The evidence and facts conducted
by early researches have also been considered in the project study with the help of literature
review. A secondary source of data is also collected in the research study which highlights the
information gathered from Australian Bureau of Statistics.
2

Table of Contents
Executive Summary.........................................................................................................................2
Chapter 1:- Introduction..................................................................................................................4
1.1 Project Title............................................................................................................................4
1.2 Background of Study.............................................................................................................4
1.3. Statement of Problem............................................................................................................4
1.4 Project Aims and Objectives..................................................................................................4
1.5 Research Question..................................................................................................................5
1.6 Project Justification................................................................................................................5
Chapter 2 – Critical Literature Review............................................................................................6
2.1 Australian Inflation Target.....................................................................................................6
2.2 Relationship in between savings and investment in Australia...............................................6
2.3 Inflation Trend in Australia....................................................................................................7
2.4 Theoretical Framework..........................................................................................................8
2.5 Hypothesis............................................................................................................................10
Chapter 3 – Research Methodology..............................................................................................11
3.1 Data Collection Methodology..............................................................................................11
3.2 Use of Secondary Source of Data........................................................................................11
3.3 Sample Size and Research Design.......................................................................................12
3.4 Data Analysis.......................................................................................................................12
3.5 Pearson Correlation Method................................................................................................12
3.6 Validity and Reliability of Data...........................................................................................12
Chapter 4 – Data Analysis and Findings.......................................................................................14
4.1 Data Analysis.......................................................................................................................14
3

4.2 Descriptive Statistics............................................................................................................14
4.3 Correlation Analysis............................................................................................................17
4.4 Research Findings................................................................................................................18
Chapter 5 – Conclusion.................................................................................................................19
5.1 Conclusion...............................................................................................................................19
5.2 Limitation.............................................................................................................................19
5.3 Recommendation.................................................................................................................19
References......................................................................................................................................20
4

Chapter 1:- Introduction
1.1 Project Title
The topic of my project study is “The Influence of Inflation on Investment behaviour in
Australia”.
1.2 Background of Study
The Australia’s inflation target is aimed at keeping consumer price inflation in between 2 – 3%
on an average. This is so because there is a significant impact of change in Consumer Price Index
(CPI) on the investment decisions within the Australian economy (Reserve Bank of Australia,
2012).
1.3. Statement of Problem
The investment decision is majorly dependent upon the index rate of goods and services
prevailing in the economy. It has been analysed from the researches and studies that inflation has
a significant impact on investment spending. Furthermore, the Australian economy is considered
to be strongest economy across worldwide. However, due to increase in global competition and
tremendous investment opportunities the CPI has a great role in such type of decision (Reserve
Bank of Australia, 2012).
1.4 Project Aims and Objectives
The main aim of this project study is to analyse the impact of inflation on the investment
behaviour in Australia.
Objectives
 To determine the current investment trends in Australia.
 To examine the role of inflation in investment decision within Australian economy.
 To provide recommendations for improving investment behaviour in Australia.
5

1.5 Research Question
Question – Does there is a perfect co-relation in between the inflation rate and investment
behaviour in Australia?
1.6 Project Justification
Though, I am pursing Master of Professional Accounting and is a student of MPA having an
incredible interest in accounting and finance. I have dreamt of my career perspective in both of
these two areas only. The project study help in understanding the wider perspective of
investment opportunities and an inflation rate which is crucial when it comes to globalization.
The project will assist me in getting deeper knowledge and experience about the correlation that
exists in between both of these variables.
6