How is CHINA creating but also lessening inflation in Australia?

The CHINA STORY is huge and growing every day.  This behemoth to our north is slowly awakening and is causing a stir all along the global economic food chain. China is exerting her influence on global commodity prices by her sheer appetite for resources.  It is estimated that 40% of the increase in global demand for oil this year has originated in China and hence this is causing the price of oil to rise on world markets. Next time you fill you petrol tank thank the Chinese for the increase in the price you are paying!

But also thank them for the decrease in the cost of many of the manufactured goods you consume.  The reason DVD players and digital cameras and shoes and handbags and clothes are a lot cheaper now than they were 5 years ago is due to the Chinese export drive. As China imports and consumes energy and commodities (oil and gas and iron ore etc) it produces for export the manufactured goods we consume.  Australia is almost alone among countries in the developed world in enjoying improving terms of trade whereby we see our exports rising in value and the price of our imports declining.  So price increases at the petrol pump are causing inflationary pressures; while price declines in manufactured goods are easing those pressure and we all have China to thank/blame for it.