CPI soars!

Hold the phone! The CPI has busted out through the quarter, it’s up 1.4% versus an expected 1%. 2% year on year versus expected of 1.6%:

Here are the various measures used by the boffins:

More to come…

David Llewellyn-Smith
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Comments

  1. This can’t just be the power price hike, or can it? I know that the power companies have been gold plating (maybe they should look at IT security, did you know that CIR, Critical infrastructure Resilience is not mandated by law, the gov leaves it up to each power company’s own judgement, so its protect or pay share holders, hmmm)and that there is the carbon tax, but what else has created a higher CPI?

      • ” much of this will wash out as UE rises”….

        In the aggregated stats perhaps, but not in my BILLS!!!

    • Gosh – who’da thunk? I can only say read Warwick McKibbin (Lowy Institute) – he did not expect full negative flow on effect of carbon tax to be felt until at least twelve months after implementation – and he predicted unemployment to rise directly as a result.

    • EVERYTHING gets hit with the Carbon Dioxide tax

      Funny, I thought petrol had carbon in it. Does it get it with the “Carbon Dioxide tax”?

      • Does it get it with the “Carbon Dioxide tax”?

        Indirectly, yes. Like everything else you buy.

  2. Duh! Hoocoodanode?

    At least someone (other than Rumples and DE)mostly gets the importance of Tradable and non-tradable inflation.

    In my meanderings I came across this post from Bernard Hickey at interest.co

    “Bernard Hickey argues the RBNZ should target non-tradable inflation to deal with a structural flaw that tilts our economy away from exporters”
    http://www.interest.co.nz/opinion/55400/opinion-bernard-hickey-argues-rbnz-should-target-non-tradable-inflation-deal-structura

    This whole CPI thing is like a dam wall that is cracking under increasing water pressure. When it breaks it will drown us all.
    Meantime screw the savers, stuff the economy…

      • “Hanrahan”

        No matter what you think of inflationary predictions, or of me, me the point of the article stands. Basing interest rates on average CPI is just plain dead set wrong and is leading to terrible outcomes for our economy.

        “We all understand it, Hanrahan!”

        You’ve shown NO sign of doing so so far….your long term view is what 3 months…any obvious mountain of evidence that extends beyond that can be safely ignored.
        You simply advocate lowering interest rates without considering what is going to happen once that is done.

      • “Hanrahan”

        No matter what you think of inflationary predictions, or of me, me the point of the article stands. Basing interest rates on average CPI is just plain dead set wrong and is leading to terrible outcomes for our economy.

        “We all understand it, Hanrahan!”

        You’ve shown NO sign of doing so so far. Your only response has been that it doesn’t matter accompanied by a certain amount of uncalled for vehemence.
        Your long term view is what 3 months…any obvious mountain of evidence that extends beyond that can be safely ignored.
        You simply advocate lowering interest rates without considering what is going to happen once that is done.

    • Yup, I’ve always stated the cash rate was too low and needed to be raised, only to have less capable talk about ‘no inflation problem’ and the need for corporate earnings.

      Non-tradable sectors have been a massive problem for a long time in this country, over 15 years.

      I for one, seeing as we have price parity with oil, would actually like to see petrol removed from the CPI basket, its price setting is not a reult of consumer behaviour at all.

      It’s down to supplier herding (collusion) on an inelastic good. Let it soar to make alternatives price competitive. Stop cutting the legs off the entire economy with a blunt instrument.

      • Jumping jack flash

        +1

        The way I understood it was, the cash rate reflected risk, and the corresponding price of money.

        These are still very risky times. Artificially lowering the price of money to stimulate the economy (arguably this is not working whatsoever so why bother), despite risk being as high as ever, is going to have some problems long term.

        Ironically, these problems will probably hit the banks because they’re the ones that “sell” the money.

        In light of this, it is little wonder the banks haven’t passed all the price reductions on.

  3. Without having read anything other than this post, the fact that the trimmed mean and weighted median are less than half the headline print leads me to believe that narrow factors such as the carbon tax and electricity prices are are to blame.

    However, the price rises will flow through to the rest of the economy in due course.

  4. Having had a look at the ABS front page now, it seems holiday accommodation and medical/hospital services also saw big price hikes last quarter.

    I definitely did not expect that for holiday accommodation. Let us see how this washes out with the revisions next quarter.

  5. This is another perfect excuse for those indebted landlords to increase rents for their tenants. (that was the reason my ex-property manager hit me with “The CPI has gone up, so’s your rent!)

    WHERE’S THE MONEY COMING FROM TO PAY FOR YOUR DEBT, KIDS?? (the “kids” crack is at the indebted landlords)

  6. Does anyone else find it interesting that (where I live, at least) petrol is presently $1.50 p/l, with an oil price well below $90, and AUD @ circa US1.02 … as compared to 2008 pre-GFC, when it also hit $1.50 p/l, with oil at a global headline-grabbing record $150 and AUD @ US0.98 … ?

    • I had almost the same thought this morning! My next thought was to ponder what happens if, say, the dollar happens to fall by 10-20 US cents or so…

    • Easy. Coles and Woolworths are offering 15c a litre off at the moment, if you spend huge on your groceries with them.

      That’s why they put the price up…and due to Aussie gullibility, Shell (Coles) and Caltex (Woolworths) control a huge amount of the petrol sales and can put whatever price they want.

      • darklydrawlMEMBER

        Current offer in October 2012 is 8 cents per litre on a $30 spend… At Coles at least – I am sure Safeway / Woolworths mimic the offer.

        http://www.coles.com.au/Stores-Services/October-Fuel-Offer.aspx

        Although I have seen the 15 cent per litre offer before. The spend is still usually pretty low ($30-$50 range from memory).

        Given our family would usually get bugger all change from $250 we can easily hit those limits.

      • …and due to Aussie gullibility

        … which includes our taking up their collusory offers, with the inevitable result that over time their duopolistic power grows ever more all pervasive … and we’ll get screwed even harder in the long run.

  7. The cracks in the dam start to form… Inflation leads to a lower dollar or higher interest rates, both of which Australia cannot handle. Wattch this space.

  8. Trimmed mean is 0.6% and that’s what the RBA looks at.

    Yawn.

    Joye, Carr, Bloxo and the other bullhawks will get very hot under the collar about this, but its basically a one-off, like the GST effect.

    If the dollar stays above parity through to the end of this quarter I reckon Q4 CPI will be back around 0.5% again.

    • Exactly right. FFS, the RBA has said it will look through one-off carbon price effects.

      Worrying about inflation as a income shock rolls down the pipe is…err…stupid! (yes, Flawse, that is for you!)

      • Yeah, what could possibly go wrong stimulating asset price inflation as an income shock rolls down the pipe…oh hang on.

        • “Yeah, what could possibly go wrong stimulating asset price inflation as an income shock rolls down the pipe…oh hang on.”

          Damn I wish I was that concise!

          Nassim Taleb has been, and is, totally wrong!!!

      • Yes just keep ignoring reality. Sit with your narrow Australian capital city view of the world thinking you know it all.

        In any case let’s suppose your income shock results in deflation of prices what the hell is stealing from one group to give to another going to achieve?….more debt? What for?
        Exactly when do you see this income shock being repealed and the excesses of credit generated income restored? In another words that the economy is restored to the ‘theoretical potential’ that has been generated by credit creation.

        You’re so illogical! One day you are crying ‘Where will the funds come from?’I agree that’s a damned good question and there is only one possible answer.
        The next day you are promoting wiping out all those who could have been the only alternate and legitimate source of the funds and making sure they can never be a source of funds again.
        Fair dinkum! You need to get your act a bit consistent from day to day!

  9. You clearly don’t want my comments on your blog. I’ll try to comply by avoiding your articles.