Aussie oligopolies love the smell of inflation in the morning

Mwahaha, Australia’s over-concentrated corporate sector is off the leash:

With operations in 40 countries, Ron Delia, the chief executive of packing giant Amcor, has a rare view of the global economy. Just don’t ask him what comes next – after a soft end to the December quarter, he’s managing even more uncertainty than he saw during the pandemic.

…But what Delia does know is that he’ll need to keep raising prices, even after putting them up by $1 billion in the December half. While raw materials costs are easing, Delia says inflation in his other costs is still running at 10 per cent.

…At Suncorp, a 41 per cent jump in profits was powered in no small part by big increases in prices, with home insurance premiums leaping 10.7 per cent and car insurance premiums up almost 9 per cent.

At Boral, new chief executive Vik Bansal said interest rate rises had done little to reduce demand and made it clear that another round of price increases this month wouldn’t be the last. “There’s still a lot more to do on price,” he told The Australian Financial Review.

This is, in some ways, protecting margins. But let’s not be fooled by gormless reporting at the AFR, these price rises are happening as well because they can. Business inflation expectations led everybody else’s and now they are cashing in. There were no profit downgrades yesterday!

The idea that inflation is off the hook amongst Australia’s oligopolies should terrify the bejesus out of everyone. There is no less competition-constrained, more pampered, and entitled born-to-rule gaggle of management fools anywhere. Fed every day on a diet of fake ambrosia ladled out by the undermensch groveling AFR.

A few points to add then:

• the Australian cycle is six months behind the US so this will calm down;
• but not before the RBA crushes households with more rate hikes.

Increasingly, the probabilities for the Australian economy in 2023 are swinging to a hard landing. Once households break, a series of automatic feedback will form:

• consumption will suddenly stop;
• the gouging oligopolies will find themselves with excess inventories;
• despite the lack of competition, they will have to destock and lose pricing power;
• margins will crash and profits tumble;
• finally, job losses will begin.

But not for the overfed inflationists now creaming it at your expense.