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ABS 6401.0 - CPI Consumer Price Index, Australia, Mar 2012; Rate cut looms as Q1 inflation comes in at 0.1%, well below market expectation of 0.6%
Topic Started: 24 Apr 2012, 12:32 PM (3,882 Views)
muzza
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zaph
24 Apr 2012, 05:58 PM


i hope you don't mind chest hair?
.....it's only a barrier of the mind :D
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Strindberg
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Inflation, as measured by CPI, has virtually ceased.

These are the last 5 quarter readings:

mar11 176.7
jun11 178.3
sep 11 179.4
dec 11 179.4
mar 12 179.5

Next quarter's annual rise will almost certainly be less than today's figure of 1.6%.

If the rise for the current quarter is similar to the rise for the last quarter then the reported annual rise to June 12 will be 0.7%. Dramatically below the RBA target.

If the rise for the current quarter is anything less than 0.9%, the June 12 YOY rise will be less than the 1.6% reported today.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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zaph
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Strindberg
24 Apr 2012, 06:05 PM
Inflation, as measured by CPI, has virtually ceased.

These are the last 5 quarter readings:

mar11 176.7
jun11 178.3
sep 11 179.4
dec 11 179.4
mar 12 179.5

Next quarter's annual rise will almost certainly be less than today's figure of 1.6%.

If the rise for the current quarter is similar to the rise for the last quarter then the reported annual rise to June 12 will be 0.7%. Dramatically below the RBA target.

If the rise for the current quarter is anything less than 0.9%, the June 12 YOY rise will be less than the 1.6% reported today.
The RBA w/should be concerned about the possibility of deflation or dis inflation, given these figures. the deflation Jennie is harder to get back in the bottle than the inflation Jennie.
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Inflation nearly too low for comfort

April 24, 2012 - 1:14PM

Sure today's inflation figures are low, but inflation is actually lower than it looks. That means the Reserve Bank doesn’t just “have room” to loosen monetary policy, as Julia Gillard puts it – the Reserve Bank is forced to cut rates to stimulate the economy to keep inflation within its target range.

The headline CPI rise of 1.6 per cent is certainly a low number and the Australian Bureau of Statistics’ seasonally version is lower again at 1.5 per cent. (The two biggest areas of price rises, pharmaceuticals and secondary education, always jump in the March quarter thanks to the structure of the PBS and when schools put up their fees for the new year.)

But those headline figures don’t matter all that much to the RBA which concentrates on the “trimmed mean” and “weighted median” measures that try to exclude the extreme movements both up and down.

Those measures for the year to the end of March are down to 2.2 and 2.1 per cent respectively – the bottom of the RBA’s comfort range but still within it and well down on the 2.6 per cent annual score in the December quarter.

The thing about annual figures though is that the June quarter is a long time ago with plenty of global financial turmoil passing under the bridge since then. What might concern the RBA a little more is what happens when you annualise the TM and WM measures over the most recent six months: you get 1.8 per cent, falling below the target.

The RBA’s job is to keep inflation within the 2 to 3 per cent range “over the cycle” so it’s not going to panic about a couple of sets of figures and dramatically slash rates, just as it didn’t dramatically increase rates when it’s measures were running above 3 per cent, but that annualised figure should be enough to pencil in another 25 points reduction in the cash rate at the board’s June meeting on top of the 25 per cent cut now guaranteed on May 1.

There will be some who will argue that today’s figures are low enough to allow a 50 per cent cut straight away, but I suspect that would smell a little too much of unseemly haste for a cautious institution.

Read more: http://www.smh.com.au/business/inflation-nearly-too-low-for-comfort-20120424-1xifp.html#ixzz1sxb6RA97
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Australia has a (domestic) inflation problem

It is good to see all the smart commentators pointing out this issue (eg, Stutchbury, Mitchell, Verrender, etc). Australia's purportedly "low" core inflation rate, which at 2.2% is actually still inside the RBA's target band (and above the target of most other central banks), has been primarily driven by the appreciation of the Australian dollar.

The rise of our trade-weighted currency has, in turn, been heavily influenced by RBA policy: the RBA has deliberately kept interest rates high in order to wrench overall inflation back into its target band, and it has not intervened against the currency's rise. More specifically, the RBA has relentlessly outlined the benefits of a high currency, and how the appreciating currency is the key medium through which Australia can have a resources boom without high inflation for the first time in its recorded history. Now think about the consequences of reversing that logic, as Paul Howes and other doves would have us do.

If you compare inflation in "domestic" goods and services (called "non-tradeables") with inflation in so-called "tradeables", which are those goods and services that the ABS defines as having their prices determined in global markets, you will see that almost all of the reduction in Australian inflation is being accounted for by these global consumer prices (refer to the blue line in the chart below). In contrast, inflation in non-tradeables (ie, domestic items) remains both way above the RBA's 2-3% per annum target, and in line with its average rate since December 2001.

This is where the debate about Australian interest rates and inflation becomes so incredibly silly and circular. All those arguing for much lower interest rates, and a much lower currency, are, by definition, rooting for higher tradeables inflation. A big fall in the currency will reverse out a lot of the deflationary benefits you can see in the blue, tradeables line slumping in the chart below. And without that tradeables deflation we would likely have an overall inflation challenge. This problem is accentuated by the fact that the reason "tradeables" inflation was low during much of the 2000s was because our key trading partners were flooding global markets with cheap goods--effectively exporting deflation. This is no longer happening. As the RBA has noted (and I have argued about for years here), China is now a source of inflation for Australia rather than disinflation.

Read more: http://christopherjoye.blogspot.com.au/2012/04/australia-has-domestic-inflation.html
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Inflation slows, adding to rate cut chance

April 30, 2012 - 10:31AM

Australia's inflation slowed in April, giving the Reserve Bank yet more reason to cut interest rates when it meets tomorrow to decide on borrowing costs.

The TD Securities - Melbourne Institute monthly inflation gauge increased by 0.3 per cent in April, following a 0.5 per cent rise in March, as prices on travel, clothing and footwear fell in the month.

“The first taste of inflation for the June quarter is sending mixed messages, with relatively healthy monthly growth rates for prices, but annual inflation remains comfortably benign,” said head of Asia-Pacific research at TD Securities said Annette Beacher.

Inflation rose 1.9 per cent in the year to April, according to TD Securities, following a 1.8 per cent rise in the year to March, below the 2-3 per cent target band of the central bank. In April the price of fuel increased 3.1 per cent, slowing from a 3.5 per cent increase in March, TD Securities said.

Read more: http://www.smh.com.au/business/inflation-slows-adding-to-rate-cut-chance-20120430-1xts6.html#ixzz1tUjK7OYv
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