Was watching the ABC news finance report with Alan Kohler when he presented the following chart. Source: http://www.alankohler.com.au/ As the CPI is made up of both tradeables & non-tradebles this chart helps make sense of how the ABS's CPI can report a low inflation rate of 0.2% for the last quarter of 2013. Most non-tradables make up every day goods and services travelling at a 4% inflation while tradables are mostly big ticket items like cars and other manufactured goods suffering a -0.5% deflation.
Interesting. However, with the money supply growing at around 7% last year, I ignore the official inflation figures.
Importing cheap crap from China is a big deflationary component. And the tragic thing is that we're not even getting the best cheap crap that China produces. Go into a $2 shop and look and the brittle plastic junk in there. Then go to a similar 100 shop in Japan and it feels like you just walked into a Myers store. Although I may be giving Myers too much credit with that comment. On the other side of the coin, it also explains why I am outraged that I have to pay $12 for what is basically a glorified cheese and ham toastie at a cafe here in Oz. There is some mysterious equation where cafe owners calculate a sprig of parsley commands a $6 premium on the item.
i've noticed different car manufacturers have been gradually reducing prices, usually with new model releases. fiat was the most recent. the strength in the dollar has been flowing through to some things now that its been sustained for a while.
Parsley is "green" Earthjade, of all people, I would have thought you would have understand the premium attached to "green". :/
Indeed! One of the reasons my cousin went to China to start his own factory was that the things he could order were of below par quality due to smaller orders to satisfy Australian demand. Like everything else, you have to bid for work. Not bid in terms of lower your prices paid for what you ordered, but bid in volume. One of Bonds' problems when they moved the Chinese production, I heard from a friend, is of volume. Eg an Australian company orders 10,000 pair of underpants. With their unique logo on it that requires tooling changes and different packaging, as minor as that is. Marks and Spencer (UK) and Sears (USA) each go to the same factory and order 500,000 pairs of underpants. What does the factory make straight away? The 500,000 orders. They want volume! If Bonds' 10,000 doesn't get made before the end of the season and fashion changes, they don't care. So Australian importers from China lose out on bidding by volume and have to go to the cheaper, smaller factories that produce junk that is complete crap compared to the expensive junk.
yep bulk is the game in china its the only way you can get a good deal & make any decent money. The freight kills it otherwise . Most companies in china have a MOQ of a 20' container .
And of course what is missed in all this discussion is that we used to make most of this stuff ourselves. But that was before we became to good to earn a wage sufficient for the owner to make a decent profit while providing employment, before the Gov't decided to give with one hand while taking with the other and before the unions became the opposite of defending the average working man and woman of our country. Where is our manufacturing industry now ? Living on handouts, provided by the taxpayer and providing a well paid sheltered workshop for a very few.
+1 and the change from a producing nation to a nation of shop keepers/bankers/government workers/clerks and unemployed will continue unless the cost of employing Australians to actually "produce" items is greatly reduced. Not to mention the red tape associated with hiring and firing.
Cost of living inflation would be above 0.2% (food, utilities) but consumer discretionary would be lower than 0.2% (computing, cars, travel). So when they put it all together the CPI is just an average. If you are buying lots of cheap crap from China there would actually be deflation. That new car from Japan would be cheaper this year than last and taking a flight would also be cheaper. But putting food on the table and paying your gas/electricity/water/rates/insurance would all be much higher than 0.2%.
True inflation is related to the increase in the money supply...rising prices are just a symptom. If overseas countries are hoarding Aust dollars at the same rate that the RBA prints them, the net result is essentially '0%' inflation. An RBA official recently said on ABC Radio national that AUD's are supplied to the FX Markets to facilitate foreign customers ability to buy Australian goods. If there aren't enough $A is circulation (because foreigners are hoading them), the RBA has no qualms about printing more to get business moving again. Now, even though our inflation is officially low, every other country we buy our imported products from have serious inflation. And because we import just about everything these days, the rising price of our consumer goods is because of THEIR inflation...not ours. This is not the first time this sort of information has been leaked into the mainstream (Kholer is just a mouthpeice/puppet), it's clear they're softening us up for some news, so expect some big news about currency printing in the next few months.
The country lives by double standards They cheer for high house prices and investment positions going through the roof and then bitch about job migration & cost of living standards. It's why I've had so many stouches in this place trying to explain the obvious. But I'm merely a fiscal pygmy, jealous, do-nothing wanna be for stating it. The collective has been remarkably effective at raising cost of living standards very willingly and with full conscience thinking they can all be property moguls and multi millionaires, then wonder how all that extra credit in the system equates to $12 sandwiches and reliance on cheap imports just to get by. We sit around and wonder at how the average joe even keeps their head above water and why every 2nd job out there is now tied to the financial/property/mining/government sector and everything else has gone to crap. Tie it all together with a big red bow of government endorsed statistical bullsh1t and what you get is an altered reality of a lot of head scratching on how it all came to be. Meanwhile, anyone who laid warning through the process was a crackpot, conspiracy theorist, jealous loser or the classic 'doom and gloomer' Well my attitude is TURTLE IT! This is EXACTLY what Australia wanted. They voted for it with their hip pocket. They voted for it at the ballot. They voted for it with their bank manager. They cannot claim ignorance or lack of warnings. They've had plenty. People's own blind greed created willful ignorance and you don't get a 'get out of jail free' card on that. I've absolute zero sympathy for the state of this country and it's citizens, they have brought this - willingly - upon themselves and ignored all the warnings, stupidly believing that everyone could be wealthy for free. So what's behind Australia's 0.2% inflation you ask? The same thing that ties this entire society together - bullsh1t, lies and damn statistics.
Even better, what's gunna happen when all those baby boomers unlock on their dollar denominated assets. i.e. while their superannuation, share-portfolios, investment real-estate etc are valued in currency (dollars denominated)...that hard currency doesn't yet exist neither a tangible dollars nor digital number is a bank's computer ledger. At some point they'll have to spring into existence to back the wealth they represent. Biblical you say?...Not even Noah saw a flood like that!
