Producer prices drop

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The Australian Bureau of Statistics has released June quarter producer prices and the news is good for inflation:

JUNE KEY FIGURES

Mar Qtr 14 to Jun Qtr 14
Jun Qtr 13 to Jun Qtr 14
STAGE OF PRODUCTION
% change
% change

Final demand (excl. exports)
-0.1
2.3
Domestic
0.1
1.9
Imports
-1.5
6.4
Intermediate demand
-0.5
2.7
Domestic
-0.1
2.3
Imports
-2.7
6.8
Preliminary demand
-0.8
3.0
Domestic
-0.4
2.5
Imports
-2.9
6.6

The year on year figures are still up strongly on imports but it’s clear that the tradable inflation surge unleashed last year by the tumbling dollar is passing “pig in the python” style, with the quarterly readings wall-to-wall deflation, just as expected.

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As I said of the recent CPI hysteria, the RBA can cut if it wants to but it needs APRA to get off its arse with macroprudential to collar house prices.

The dollar reversed all of its China PMI gains and is at the lows of the day.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.