TD monthly inflation goes berserk!


TD Securities monthly inflation has ripped off a wild number for December at 0.7% month on month, pushing the yearly rate to 2.7%. However, much of the jump was due to one-off influences, including an unseasonably large 5.8 per cent spike in prices for fruit and vegetables and higher tobacco taxes. The falling dollar is also apparent with petrol rising 5 per cent.

There will be increasing tradable inflation coming through the pipeline this year but it should be offset by soft labour markets.


  1. agree – too early to panic about this – although it technically puts Australia in Negative real rate land with the official cash rate at 2.5%

    we won’t see monthly rises of 0.7% but i don’t think anyone will be shocked if we see 3% inflation next year.

    Extent to which soft economy/weak labour market offsets potentially weaker AUD still to be determined

    • Jordan

      “we won’t see monthly rises of 0.7%”

      Wanna bet? Maybe not next year but give it a year or so. I don’t think anyone in this country has considered inflation and the forces that will drive it. MB’ers, who I’d regard as amongst the more intelligent’ typically start talking about ‘no demand’ etc
      Unfortunately I don’t think modern thinkers understand inflation and what it does to the economy the society and the nation. I guess you have to be both as old as me AND to have been one of those who bore the brunt of inflation in the last serious episode. There aren’t too many of us left.

      • hi Flawse

        i’ll bet that next year we won’t see monthly numbers like that 🙂 sorry i should have specified the time period

        im well in agreeance on the inflationary outcome or road we are headed down and i think what’s coming could end up making the 1970’s look like a picnic.

        Inflation or deflation, i’m glad i own real physical gold

      • Jumping jack flash

        Any inflation we experience in gouged essentials like food and energy, will be completely offset by falls in imported trinkets that nobody will be able to buy anyway (assuming our dollar stays reasonably high, and, surprisingly it may not) so when the ABS adds it all up, the result will be “steady as she goes, nothing to see here, move along”

        Isn’t statistics wonderful?

  2. higher unemployment -> lower rates -> lower dollar ->higher inflation -> higher rates -> higher dollar -> higher uneployment

    • Higher rates? Doubt it. Remember, the RBA have a long term track record of proudly “looking through” inflation, and also actively pursuing house price (hyper)inflation at all costs.

  3. When the metrics for measurement don’t include some of the biggest costs of living, who are we kidding that these numbers mean anything?

  4. @kodiak and Dave_comments
    yeah, including things like fruit/veg and fuel.. pfft. who needs any of that rubbish?

  5. Real incomes continue to be affected by terms of trade effects that are now being compounded by climate-change effects. These are secular forces and operate independently of short-run cycles, such as those that affect interest rates. Income stagnation is here to stay and will drive everything in the Australian economy for years to come.

  6. 3d, what are you trying to suggest? That climate change is not affecting the range and period of variability in the weather? Or that climate change will not drive volatility in agricultural production?

    For at least 200 years real food prices have been falling. This has been a very significant contributor to the rise in incomes and other gains in welfare, including not least in human nutrition and life expectancy. These gains will certainly be undermined by the effects of climate change on production in agriculture, fisheries and forestry. This is already happening and will only become more pronounced as climate change accelerates.

    Perhaps you should clarify for the benefit of readers here whether or not you are a paid contestant when it comes to the economics and politics of climate change. That would help keep things “real”.

    • Since man left the cave adapting to the vagaries of climate variability has ensured survival. Whether short term catastrophic events or longer term impacts on arable lands human ingenuity and innovation has led to practices which in modern times have resulted in the supply and pricing you note.

      Climate warmists are remarkably confused and understandably so when almost daily their theories are either debunked or ridiculously broadened to encompass any and all natural climate/weather events that have always been a part of human existence.

      • 3d is busy with a mouthful of Mitch Hooke’s cock at the moment, so I’ll clarify for him – yes, he is a paid contestant obfuscating on behalf of resource companies.

      • Some days I find this place just plain disgusting!!! What the hell is the matter with you you foul mouthed bastard!!!!!!!!!!!!!!!!!!!!!!!

      • The central propositions of climate change have been neither debunked nor “ridiculously broadened”. To assert otherwise is simply to employ empty polemics. The theory and the data are actually remarkably clear and readily testable.

        But more specifically, you should really declare an interest if, as alleged, you are paid to contest this on behalf of others. Who pays you? And how much?

      • Flawse – cheers – Spleen overstepped there.

        Briefly, the theory is less than clear, subject to ongoing modification the extent of which confirms the very ‘untestibility’ of the claims.

        My agnosticism arises from my skeptical nature; my views are my own.

      • General Disarray

        I’d love some examples of this “almost daily” debunking. If you could provide a few links to this months debunking that should do – an easy task considering it’s an “almost daily” occurrence.

      • Well briefly I dislike the hijacking of threads. However the offensiveness of this forum to 3d1k is quite over the top and makes it a place I no longer want to be part of. Extremism reigns supreme here at the moment.
        I have a scientist friend who travels the world speaking at climate conferences who would disagree with you quite vehemently. Climate change yes! How much are we responsible for is open to question but whatever it is is overlaid on an already ‘in progress’ event. That’s not to say we should set about destroyuing the world at the most rapid pace we can.
        However the hypocrisy on display here at MB when people argue for Carbon Taxes etc, no matter what the cost to others in this country, while, at the same time, arguing for lower interest rates to stimulate consumption and greater waste is quite simply astounding.
        I guess if you are an extremist nothing matters but your own opinion (not directed at briefly)

      • Sorry if that offends you, flawse – I generally try to express myself in the mildest form possible.

        What I find a little more offensive than a bit of good natured ribbing no worse than happy hour at your local (my local, anyway), is how the wealthiest components of society have successfully captured political influence over the past few decades to skew policies in their favour at the expense of the poor. Twas ever thus, to be sure, to be sure, but doesn’t mean you have to like it, and mr three dogs and 1 kid here unabashedly and smugly represents those interests, and deserves all the stick he gets.

      • Spleenblatt You know absolutely nothing asbout teh person 3d1k.
        What you did was the usual extremist response. Logic and civility no longer apply in teh pursuit of one’s own agenda. Nothing else matters. Funny you know I thought this conversation in this forum was supposed to be at some higher level than the local tattooed fat ignorant bogan in the local pub. Obviously I’m werong about that. You’re right! it’s where we are headed so i suppose it’s appropriate that Macrobusiness be in the vanguard of the new way of reasonoing.

        3d1k tells us who it is that the person 3d1k works for. Who else does? The Labour shills in here? The stupid organised Left from some univesrity or other propunding stupid inrealistic theories are not promoting their own agenda. Does the occasional Lib organisation member tell us who they are? 3d1k is probably one of the most honest people in this forum. Is it a crime for 3d1k to rationally argue the case that mining is an essential and beneficial part of the Australian economy? Is it so outrageously wrong that it deserves the sort of filthy response you gave that 3d1k happens to disagree with you on climate change and its major drivers.
        Have we reached the stage on MB that we will not tolerate any dissent from the Leftish myopic view of the world? Is that anyone who transgresses these new laws will be subject to a co-ordinated attack of utter filth on their person?
        It seems so. Well good luck to MB with that agenda running.

  7. Hoocoodanode?
    As to soft labour markets the whole Australian labour market is totally sclerotic. There is no flexsibility and the powerful, unions, executive and government, will go for their ‘fair’ compensation for rising inflation….and get it!!! Our Just as low and negative tradable has had a feedback into ‘low’ non-tradable (4 to 5%) inflation over the last couple of decades so now high tradable inflation will feed into non-tradable in a non-stop ascending feed-back loop.Those who stupidly want inflation are about to get what they want.

    The RBA will ‘look through’ inflation that’s for sure. In any case raising interest rates to ‘slow’ the economy will not fix inflation. (The reverse of recent experience where low rates and resultant credit creation did not induce inflation)
    In our stupid economic system the only way to slow it will be to drive up the dollar….yes using higher interest rates, in a moribund economy, to do so! Wow! Great! There’s nothing wrong with our economic principles.

    This is a disaster that has been coming for decades. Predictable but with timing uncertain. It’s starting to look like its time has come.

  8. “As to soft labour markets the whole Australian labour market is totally sclerotic. There is no flexsibility…”

    This is not supported by the evidence, which shows ongoing substitution of part-time work for full-time work over many decades and recent earnings growth that barely matches the CPI as hourly labour demand stagnates. We are now seeing the early phases of real wage depreciation.

    • Briefly you are misunderstanding the argument I think/
      First we are not talking about wage levels alone. There is a vast difference between the powerful and the poor b….r who is currently earning sfa. We have had low wage increases as a result of low inflation numbers and resultant rising ToT. Further here, we are talking about wage costs not what people get in their pay packet. They are two very different things and we have indulged ourselves in costs these past few years.

      There is no debate about part time vs full time and indeed the cost of part time workers. However the cost of part time workers has increased substantially over the past few years and seems destined to continue to increase for the immediate future.

      There will be real wage depreciation in some quarters. Those who don’t have the power will cop it in the neck and nobody in power will give a RA. That’s the point of what I’m saying.

      • Nevertheless, the proposition that there is no flexibility in the labour market, generally speaking, really needs to be tested. The easy substitution of casual for permanent workers, of part-time for full-time workers, the ready availability of temporary foreign workers, the very high numbers of temporary economic migrants, the limited scope of wage determinations by the Fair Work Commission and the high degree of labour mobility all suggest the system has high inbuilt flexibility.

        Of course, some in the economy have preferred positions by which they can and do secure advantages in relation to incomes and other conditions. But these are the rent-taking classes and do not form the mass of the labour force.

  9. “3d1k
    January 20, 2014 at 5:22 pm

    Briefly, the theory is less than clear, subject to ongoing modification the extent of which confirms the very ‘untestibility’ of the claims.”

    This is just false. The theory is remarkably clear, based as it is on the demonstrable properties of CO2 with respect to energy absorption and radiation. As well, the predictions made by science generally fit the data. There is no credible alternative explanation for the climate change observed in the last few decades.

    Sure, there is agnosticism. All that really achieves is to elevate one’s own ignorance above the learning of others, and to provide a cloak for either laziness or indifference or both.