CPI revisionism

Here are a couple of bank takes on today’s ABS CPI revisions. Consensus is that the RBA’s job of holding rates steady just got a bit easier. I beg to differ. The ABS just handed a PR weapon to every disgruntled business lobby in the services economy. Anyways, Rumplestatskin, our very own CPI guru, will offer the final word on the revisions tomorrow morning.




David Llewellyn-Smith

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.

Latest posts by David Llewellyn-Smith (see all)


  1. > The statistics bureau today announced
    > downward revisions to the RBA’s preferred
    > underlying inflation measures, aspart of
    > a review. These revisions are due to
    > changes to the seasonal adjustment
    > technique.

    So it doesn’t necessarily mean that the CPI is down due to falling prices but rather it’s down due to statistical manipulation.

  2. Hmm, “RBA”s preferred underlying inflation measures” just might not be the measures that Joe Average would choose. Right at the moment the rising cost of basic utilities is hurting real people. Yet the RBA “Don’t my new clothes look nice? Only smart people can see them” seems to think that inflation is low.

    Time to retire them and establish a gold standard

  3. The RBA must use consumer electronics, milk and bananas as their “basket of goods” because that’s about the only things I know of that have dropped in price lately.

    There was a recent admission that fuel prices were going to continue upwards forever. This mustn’t be included in that basket either.

  4. Disagree H&H with unemployment increasing and looking to go up even further, manufacturing slowing and housing going down the tubes I dont think we will see any rate increases. I believe in the next 6 months rates will come down maybe .25 or .50 not much more than that.