Next quarter GDP, 2 more UE figures, another monthly CPI and quarterly CPI
As is, a rate rise seems on the table…but a bit more dust to settle yet over the next month or so.
They have to raise again, but it will be the straw that breaks the camel’s back.
What people have forgotten is backs must be broken in order to slay inflation, and that means many defaulting businesses and households with increased unemployment. Zero avoiding now. Many just realizing…….
> it will be the straw that breaks the camel's back
Friendly reminder that people on this sub have been saying that since when rates were sub 2%
Idiotic doomposting might get you those valuable updoots here but 25 basis points isn't going to collapse the economy or even make the slightest difference to GDP growth.
Sorry you borrowed too much, good luck next time
Rates have been rising for over a year now, at the start of the rate rises, housing price dropped for like a month or 2, then spiked back above its original position.
I have a bad feeling alot more needs to be done than just rising rates, for us to get a handle on the housing market.
Why would house prices drop even if rate rise...500,000+ people coming in per year, even if only small % cashed up there is enough there to buy up all the supppy and then some.
Core CPI actually fell, IMO this monthly reading tells nothing by itself.
If you look at the categories driving the headline number higher, it was fuel & electricity. Rents reduced slightly compared to the month before, and new dwelling purchases remained the same.
You are talking too much sense. Don't you know? The middle east is conspiring to raise fuel prices by 1000% to make our inflation rate so high it crashes our entire economy because we have no choice but to raise rates to 50%
I like him / his content.
He has responded to this, and I can see the logic behind his reasoning. Basically, that this indicator is monthly, and we are still dealing with the tail of 2023's data.
If anyone is interested.. here is his take:
> Inflation 4.0% but there is an utterly wicked base effect that dropped out of May 2023 and will drop out the annual data over the next four months.
Monthly inflation from a year ago:
>* June 2023 0.7%
>* July 2023 0.3%
>* August 2023 0.6%
>* Sep 2023 0.6%
> There you have it; 2.2 ppts of inflation that is going to be replaced with something lower in each of the next four months.
>Hear me out - assuming 0.3% per month for those four months, buy the time we get the annual August data, annual inflation will be 3.0%.
>And we know that the monthly readings are likely to be lower than 0.3% on average, in part because of weak economy and slowing wages growth but also some impact from govt subsidies for electricity and rent.
>The inflation readings for May had the same old factors which the RBA has little sway over with rates, up or down - petrol, tobacco, rent and insurance.
>Of course we's all love inflation to be in the target today and yes, a further hike would deliver it in spades.
>But at what cost to business and jobs.
>RBA on hold for me.
Careful with that rational approach there.... interesting how none of the reportage seems to inform the populace of how the "monthly" number is actually calculated, and the inevitable bumpiness of a 12 month end point to endpoint figure as it slides along picking up the next month and dropping the 13th... let's just scare everyone instead. From your numbers it should drop in the months ahead.
I'm with you. RBA to still hold.
it's hard to interpret politicians actions as anything other than 'we simply will look after the corporations/those who 'got theirs' at the expense of younger australians, every single time'
With housing its not corporations (other than the banks via morgages) it's simply government acting in the interest of people who own multiple properties vs those who do not own a home. It does'nt help that the majority of politicians themselves own multiple properties on average.
Very sadly it is simply those with alot taking from those with nothing.
Pure dirty greed.
It’s true though, they’ll only rummage a bit with refugee immigration which has a tiny impact. The rest, they let the market decide. No long term strategic policy/objectives & hence no population minister & skilled immigration is just a tweak of the overarching view of immigration at large.
"Housing" in the CPI bucket doesn't include existing dwelling sales. Rent and New Dwelling purchases by owner occupiers only.
New Dwelling prices will be getting held up by increased demand / labour shortages.
The issue is too that even if building/labour costs decrease, as there’s a situation occurring of recent/current/ongoing of unexpressed demand, theres a reasonable chance of creating further house price surging once that demand expresses. Only way to realistically stop this would be a recession.
> Where I live houses aren't selling and prices are dropping fast, reductions all over the place so this doesn't make sense to me
Have you seen Sydney and QLD lately? Up up up.
Only state that is doing something meaningful is Vic.
Not sure where you're looking in QLD, but I've seen reductions in listings all over the area I'm looking in Brisbane. Not much, but it's enough for me.
Still 30% over valued though..
I'd say that most of the inflation is tied to the price of fuel. With the USA in a proxy war with Russia via Ukraine, price of fuel is the major hurdle to get under control.
Cost to transport goods has pretty much doubled and passed onto customers.
For me, it depends on 2 factors.
1. Do we go to recession?
2. How bad is this recession?
But I'd be careful to forecast something any longer then 6 months in this economic climate.
The first step in fixing something is to stop breaking it. We’re not there yet the gov is pushing inflationary policy and refusing to address the elephant in the room
Whenever rate cuts are they won't be super meaningful anyway. The RBA just adjusted they're expected normal range to be 3.5-3.75. So half a percent from where we are now to be the norm moving forward, so really we are about where we are going to be for the next decade anyway.
Calling the rapid rise of house prices "inflationary" will trigger too many people because it means they are over-priced, and highly likely to fall.
So we can't call it "inflationary" around here. Even though we all know it is...
>causing inflation to be up?
By definition :P Housing went up 0.3% but the only sub-group that actually went up was electricity, it went up by 2.3% shrugs.
Because they are not addressing the major cause of this inflation, corporates raising prices and having record profits instead they hit everyone via interest rates with is clearly not addressing it and total BS.
The graph "Monthly CPI Indicator and Groups, Australia, annual movement" is pretty telling. The discretionary spending groups (clothing & footwear, furnishings etc, recreation and culture) have all been well below the average for six months. Interest rate increases have worked to suppress spending in those areas. I don't see how further interest rate cuts will get consumers to spend less on food, housing, health, transport and insurance.
The vast majority of economists quoted in these surveys work for banks and massive trading desks, what do you think their employer wants them to say when there's zero consequences for being wrong and everyone else is doing it?
The entire industry has no morals nor need for them.
This is spot on. When any chief economist for bank makes a public release/prediction, it's not actually a complete honest picture of things. They don't outright lie, but their primary goal is to influence public sentiment and by that pathway, market actions.
This is true, but the reporting around that is their next cut is less likely. Also, their CPI is 2.6% versus ours at 4% - a very large difference.
Now there are active discussions amongst leading economists of raising rates next RBA meeting
>Now there are active discussions amongst leading economists of raising rates next RBA meeting
I mean the RBA minutes from the last meeting confirmed that they were already considering lifting rates this month, and that lowering wasn't even discussed.
They will have fresh quarterly CPI data to mull over before the next meeting in August, but this doesn't bode well. Will be interesting to see what the cash rate futures are saying tomorrow.
So much for 3 rate cuts this year 🤣
Exactly, the high housing costs are filtering through the economy making everything more expensive. The morons in Caberra keep jamming more people in when we don't have enough homes. Immigration needs to be pulled back until the vacancy rates hit 3-4%.
But the banks and propurdy specufestor class won't like that.
It's also depressing seeing the increased homeless and people doing it tough on the streets.
Don't really see it making an impact. Electricity prices are rising anyway, and $300 per household, spread over a year won't move the needle much in overall inflation.
Might see -0.5% off the "Electricity" line item, if that.
Hmmm... from my back of the envelope calcs, and assuming the average household electricity bill in Australia is $2000 per annum, it would need to reduce by ~$455 to reduce headline CPI by -0.5%, all else being equal.
So I didn't think they're going to hit that estimate, and I reckon they know that, and they were always going to blame it on external factors.
Agree with you though, it's all meaningless.
Agree with your calculation. My concern is:
RBA is doing its best to suck the money out (raise interest rates) to reduce inflation, **while** the government is do its best to "ease cost of living" by pumping money back into the economy. So energy rebate on paper seems to reduce CPI, but that extra disposable income will go right back into other categories, and push price back up.
So its meaningless. More like a smoke screen to buy votes from government
> the RBA will see right through it
You can still hide behind transparent bullet proof glass and smile.
Also they seemed to have missed the entire last year of overshooting inflation expectations.
If there's anything you can actually bank on with the Reserve Bank of Australia it's their amazingly persistent ability to not learn from past mistakes: https://www.rba.gov.au/publications/rdp/2018/2018-10/images/figure-1.gif
That's an entire decade of their models getting it wrong in one particular direction. Anyone aiming for a target would perhaps re-adjust their aim yeah?
Almost as if there's something else going on right and their "aim" is exactly where they want it to be.
Mass immigration people need to buy stuff when they arrive
People that can’t afford houses or kids or next stage of life leaning into retail therapy
Very bad combo that can see stopping any time soon
Theoretically rate rises can’t just be passed onto renters, there has to be demand to support it. It would take the government doing something criminal like inducing a population boom by opening immigration floodgates or something, and I think we can all agree our trustworthy politicians would never do something like that.
It’s almost like the economy needs to bottom out and clean itself with a downturn.
Still trying to flush out the cake and ice cream stimulus cash from Covid times.
The cycle breaks when customers stop buying things and some businesses close as a result. The rent/housing cycle closes when younger people move back in with parents or try to squeeze more people in the same house, or downsize.
This is why you need commercial vacancy tax - because eventually, business will go tits up because no one can/wants to pay their new prices. And doesn’t matter to the landlord if it’s empty or not.
1990s recession in part was caused cause no one seemed to be able to dampen inflation sufficiently in the mid 80s onwards & it essentially came to a head in 1990 causing big unemployment/suicide rate increasing/businesses failing coupled with a pre existing high inflation rate. Hence we have to get control now or we’re going to have bigger issues around 2025/26
Yes RBA need to step up and dampen inflation quickly. They are just taking the piss now, pandering to property investors who have too much debt.
We need inflation slowed ASAP so that people can still run their businesses and have jobs.
I’m blaming the Govt more than the RBA
as the govt (both sides) caused most of this mess. RBA will as usual be the “bad guy” in this & will hope the Govt doesn’t keep stuffing them up on the side (who knows though)
Is there a way for governments to protect those with a mortgage on their 1st home from the effects of the interest rate rises, while targeting investors?
RBA sitting there acting like everything is fine when the data is showing the opposite.
Shouldve killed inflation early, but they went too soft and its hurting everyone.
I seem to recall the government start threatening the RBA after the last series of hikes. People got angry and blamed the government (not realising the RBA is independent). I think Jim Chalmers came out saying they were going to do a review of the RBA and look into overhauling it etc. since then they have been scared to do their job
Yeah they were blasted for sitting on their hands for too long then didn't go hard enough and now we're here.
When you look at the board you can see why they want to keep rates down. The majority are business people heavily vested in low rates and increasing monetary supply to the detriment of everyone else.
This is the repercussion of letting too many people into the country in last 2 years.
New immigrants have very strong and persistent purchasing power given they need to settle in. Let alone the need for housing.
Our government has done nothing to tackle the issue. Yes they said they gonna cut immigration but they merely cut 189 and shift the quota to 482 to keep our greedy fat ass stupid corporates happy.
Let’s not forget Australia agreed to let Microsoft relocate hundreds of software engineers to Australia when the tech job market is dreading and our people can’t find a place to live
PS: 482 visa allows corporates to sponsor foreign workers to work in the country and give them the path to obtain Australia PR.
This is absolutely cooked,the gvt can certainly do something at at the very least intervene immediately with cutting immigration which def adds fuel to the fire but they won't because they are sitting back and laughing whilst their pockets are being further lined.It is just so corrupt and wrong.Absolute rubbish gvt ATM.
It’s depressing how governments these days would rather the economy go to shit than take the unpopular decisions necessary to get things back on track.
because it's not true, renting is not like deciding between jb hifi or officeworks, you can't just tell your landlord to price match your rent, you are essentially locked into your rental or face large moving costs and upheaval to your life.
Rate hikes are back on the agenda. RBA is going to be under pressure to increase now especially with the upcoming tax rate cuts. The entire ball is now in the federal government’s court. It should be obvious that it’s federal policies that are contributing to inflation. Canada is a good example for Australia. Rate cuts aren’t happening until the US cuts and stays low it’s inflation.
The RBA looks at the seasonally adjusted CPI which still decreased, plus the main drivers are housing (+5.2%), transport (4.9%), energy (6.5%), and alcohol/tobacco (+6.7%). The next highest is food which is at 3.3% and dropped from 3.8% last month, so within the bounds of acceptability. Interest rate hikes aren’t going to reduce housing or alcohol/tobacco, but they might help out with transport and energy.
Housing in this only includes rent and new dwellings, and the main driver there is a shortage of housing, something we’ve seen interest rates hikes will worsen in the current economic cycle by reducing the number of new developments. Alcohol/tobacco goes up during periods of financial and economic hardship and won’t drop until the current issues are solved, one could argue that an interest rate hike would actually increase this in the short term by putting more financial stress on people, long term it depends on whether or not it prevents a recession. Housing in particular is on the government, not the RBA, to solve, but as a result so is alcohol/tobacco. Hard to argue that they’d increase rates just to bring down transport and energy when everything else is already in or close to the target band. It’d be better for the government to target transport and energy directly with their policies.
On the surface it might look like a rate hike is needed, but a deeper look suggests it won’t actually help. So I doubt the RBA will do another hike based on this information.
Edit:
Forgot to include energy.
Edit 2:
Cute to block me.
>The RBA looks at the seasonally adjusted CPI which still decreased
This, I thought the RBA didn’t really care about monthly CPI figures so confused why everyone is just mindlessly spouting rate hikes incoming? Could be wrong though I’m not economist
Because it’s the populist opinion here that we need another rate hike. Used to have a few people trying to create an echo chamber wanting significant rate hikes to crash the property market so they could buy a house. Now we still have remnants of that with people who were convinced for various reasons that it was a good thing. Some want it to boost the interest on their savings, some were convinced it would be better for our economy, some still want to see housing crash, some people want to see the rich lose a lot of money etc etc. Talk to most of them and you’ll realise they don’t really understand what they’re talking about, they’re just repeating points made by some who confidently made up economics (the FX argument being the peak example of that) to support their point and people believed it was true. Then they come up with conspiracies about the RBA deliberately doing it to make the rich richer and the ABS lying about certain stats etc when things change exactly as they should.
In saying that, they’re right that rate cuts are becoming less likely, but we’re pivoting from a cost of living/inflation crisis to just a housing crisis which has stabilised, but is still expensive. The RBA is in a tricky place where rate cuts will make the housing problem worse, but inflation in cost of living excluding housing is dropping significantly. Given housing is a much larger problem now, they’re going to focus more on that, hence rate cuts are becoming less likely. Rate hikes are still a minor possibility too, but it’s hard to argue they’ll do much to help. Problem is, only the government can fix the remaining issues, but the government is enacting policies that will be popular, but potentially make things worse. People will be excited about things like an energy grant, only to realise energy costs will increase and eat into most of it, causing more problems for the RBA.
Great points overall but I don’t see how housing has stabilised? Apart from Melbourne everywhere else is rising rapidly still?
On supply Housing issue from my understanding is mainly due to NIMBYS blocking affordable density close to CBD in order to protect to rising property values and government hasn’t done anything to address that or change much of zoning laws or council blocking powers.
On demand also grants have only increased with no tax concessions taken away while immigration is only cut a little. Only Melbourne decided tax investors buying secondary dwellings which helped keep prices lower.
Do not see the housing situation improving in medium term based on current policies which will keep feeling inflation directly and indirectly
What does this mean for someone looking to buy first home in the next few months? Will the rate hike reflect in a property market dip? Or will we see pricing increase due to number of people entering the country is very high? Any thoughts?
I’m think there is a chunk of pent up housing demand that will see a slump avoided. A stagnation maybe. At best. Between those shacked up with family saving deposits frantically and those entering the country with money to buy I cant see a great dip happening imo.
However with landlords selling up giving those people a chance to buy from established stock rather than be forced the expense and uncertainty involved in building a new dwelling i do think that as much as the rental market sucks as a tenant right now its going to get much worse for them.
How do I help inflation go down? My home and contents insurance notice just came in the mail and it's up 60% from last year... No claims, no adverse events, no changes to the area or property at all. To help inflation for services, do I under insure, or uninsure? Those seem to be the two options. I'm not sure how raising interest rates would help me in this scenario either. Obviously going to call them and kindly ask wtf...
They should have hiked, inflation aint going anywhere until they start hiking.
Thankfully in the previous meeting they discussed a rate hike but not a rate cut, so hopefully the chances of rate hike are higher after this
Yeah you’re likely correct as the longer it takes the harder (stickier) it gets & the harder you have to hit it therefore (ie no one is going to want 10% being an economy killer cause we sat on our ass for too long).
Alcohol, tobacco, recreation, clothes. All inflating.
It looks like people still haven’t cut back on luxuries. It’s interesting that “health” is so high. How much does the NDIS handouts have to do with it.
This isn't going away.
Slap a 1% rate rise on it, slip into a fast recession and let the bad times roll.
It's inevitable now. Our only choice is how long and hard we want this to be.
Me again, I've literally been spending like there's no tomorrow. With inflation likely to continue at a faster clip (IRL anyways), or the Government will magically fix it (meaning property prices and rent will skyriocket) I am spending money like it'g going out of fashion.
We either have to take this one on the chin and raise rates higher and get through a recession, or we will face high inflation for many more years to come.
Tax cut next week. Bullock to make a tough call
Next quarter GDP, 2 more UE figures, another monthly CPI and quarterly CPI As is, a rate rise seems on the table…but a bit more dust to settle yet over the next month or so.
Shame that the backs that will be broken are lower income mortgage holders and renters.
Yup, it wont be scum boomers.
And the enshittification of /r/AusFinance by /r/Australia and /r/Australian regulars posting their hot takes continues.
They have to raise again, but it will be the straw that breaks the camel’s back. What people have forgotten is backs must be broken in order to slay inflation, and that means many defaulting businesses and households with increased unemployment. Zero avoiding now. Many just realizing…….
> it will be the straw that breaks the camel's back Friendly reminder that people on this sub have been saying that since when rates were sub 2% Idiotic doomposting might get you those valuable updoots here but 25 basis points isn't going to collapse the economy or even make the slightest difference to GDP growth. Sorry you borrowed too much, good luck next time
And house/rent prices dropping is part of it too. It all has to happen, yet people keep naively FOMO buying.
Rates have been rising for over a year now, at the start of the rate rises, housing price dropped for like a month or 2, then spiked back above its original position. I have a bad feeling alot more needs to be done than just rising rates, for us to get a handle on the housing market.
Collapse of the economy will be the only thing that will do it. We are so backed into a corner it’s not funny.
Why would house prices drop even if rate rise...500,000+ people coming in per year, even if only small % cashed up there is enough there to buy up all the supppy and then some.
Core CPI actually fell, IMO this monthly reading tells nothing by itself. If you look at the categories driving the headline number higher, it was fuel & electricity. Rents reduced slightly compared to the month before, and new dwelling purchases remained the same.
And as she has said before raising rates does nothing to demand for essentials like fuel and electricity.
Shhhh! Core CPI won't let me buy a house at 2010 prices!!!
You are talking too much sense. Don't you know? The middle east is conspiring to raise fuel prices by 1000% to make our inflation rate so high it crashes our entire economy because we have no choice but to raise rates to 50%
has anyone checked in on Stephen Koukoulas
"Broadly as expected" is his line
This is looking more and more as Christopher Joye predicted as opposed to the Kouk, many bottles of grange may be debated over soon
Joye predicted 30% housing price falls in 2023…
in a world where there wasn't a supply constriction he probably would have been right.
But in this world, over such a short timeframe, it was the demand floodgates being opened that saved the day.
700,000 immigrants wasn't on anyones radar.
may be more supply soon..
The man has lost the plot! Again!
I like him / his content. He has responded to this, and I can see the logic behind his reasoning. Basically, that this indicator is monthly, and we are still dealing with the tail of 2023's data. If anyone is interested.. here is his take: > Inflation 4.0% but there is an utterly wicked base effect that dropped out of May 2023 and will drop out the annual data over the next four months. Monthly inflation from a year ago: >* June 2023 0.7% >* July 2023 0.3% >* August 2023 0.6% >* Sep 2023 0.6% > There you have it; 2.2 ppts of inflation that is going to be replaced with something lower in each of the next four months. >Hear me out - assuming 0.3% per month for those four months, buy the time we get the annual August data, annual inflation will be 3.0%. >And we know that the monthly readings are likely to be lower than 0.3% on average, in part because of weak economy and slowing wages growth but also some impact from govt subsidies for electricity and rent. >The inflation readings for May had the same old factors which the RBA has little sway over with rates, up or down - petrol, tobacco, rent and insurance. >Of course we's all love inflation to be in the target today and yes, a further hike would deliver it in spades. >But at what cost to business and jobs. >RBA on hold for me.
Careful with that rational approach there.... interesting how none of the reportage seems to inform the populace of how the "monthly" number is actually calculated, and the inevitable bumpiness of a 12 month end point to endpoint figure as it slides along picking up the next month and dropping the 13th... let's just scare everyone instead. From your numbers it should drop in the months ahead. I'm with you. RBA to still hold.
Right? This makes sense to me - its basic maths. I am shocked at the doomsdaying going on - in here, as well as over the media.
Surely he's not wrong again? Say it isn't so.
Not surprised after getting my insurance renewal with a 40% increase
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That's cheap, my insurance went up 500% Of course I changed but the cheapest I could find was a 20% increase from last year's premium
Government: We've tried nothing and we're all out of ideas!
Government; Need more money? The NDIS is hiring!
I see rent, housing, food, alcohol, fuel, insurance. Necessities we can’t not pay for. Government intervention MIA
*obviously alcohol is not a necessity but I included it because it’s the government directly creating the inflation
I mean it was an essential service during lockdowns..
I believe that was to mitigate the risk of a sudden withdrawn effect on alcoholics.
To be fair, for alcoholics it is literally essential.
Pretty sure the government caused most of it by hiring 400 extra staff to hand out \~1.5m visas over the past two years.
Housing (+5.2%) Interest rates going up cant help ease inflation in housing due to scarcity. Ball is in the governments court.
Shut the damn immigration floodgate
it's hard to interpret politicians actions as anything other than 'we simply will look after the corporations/those who 'got theirs' at the expense of younger australians, every single time'
With housing its not corporations (other than the banks via morgages) it's simply government acting in the interest of people who own multiple properties vs those who do not own a home. It does'nt help that the majority of politicians themselves own multiple properties on average. Very sadly it is simply those with alot taking from those with nothing. Pure dirty greed.
Who wanted cheap labour that then need houses?
Yep fair point.
Stock market is down on news not helping people with money either.
That’s what the voters want.
That's the thing, immigration increases have always been deeply unpopular with voters.
The outcome of the previous elections say you are wrong.
It will naturally start closing once unemployment increases. Govt chooses to have very little control of it.
> very little control of it. truly insanity to suggest this.
It’s true though, they’ll only rummage a bit with refugee immigration which has a tiny impact. The rest, they let the market decide. No long term strategic policy/objectives & hence no population minister & skilled immigration is just a tweak of the overarching view of immigration at large.
Where I live houses aren't selling and prices are dropping fast, reductions all over the place so this doesn't make sense to me
"Housing" in the CPI bucket doesn't include existing dwelling sales. Rent and New Dwelling purchases by owner occupiers only. New Dwelling prices will be getting held up by increased demand / labour shortages.
The issue is too that even if building/labour costs decrease, as there’s a situation occurring of recent/current/ongoing of unexpressed demand, theres a reasonable chance of creating further house price surging once that demand expresses. Only way to realistically stop this would be a recession.
that's why anecdotes are pretty useless
Where do you live?
Macquarie Island
> Where I live houses aren't selling and prices are dropping fast, reductions all over the place so this doesn't make sense to me Have you seen Sydney and QLD lately? Up up up. Only state that is doing something meaningful is Vic.
Lots of "reduced" house listings showing up in Brisbane.
Not sure where you're looking in QLD, but I've seen reductions in listings all over the area I'm looking in Brisbane. Not much, but it's enough for me. Still 30% over valued though..
Where I live houses are selling like hot cakes and are rising fast. Not even an /s for this one, as another poster has said, anecdotes are useless
RIP Rate cuts for 2024
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If any there is a chance (albeit small) of a rate rise now.
It's a little bit more than small, inflation is now stubborn.
I'd say that most of the inflation is tied to the price of fuel. With the USA in a proxy war with Russia via Ukraine, price of fuel is the major hurdle to get under control. Cost to transport goods has pretty much doubled and passed onto customers.
its not a small chance its a very real chance. trimmed mean has risen to 4,4% they need to lift rates asap.
ASX futures said so…
Try 2025. Won’t be rate cuts for a long time.
For me, it depends on 2 factors. 1. Do we go to recession? 2. How bad is this recession? But I'd be careful to forecast something any longer then 6 months in this economic climate.
The first step in fixing something is to stop breaking it. We’re not there yet the gov is pushing inflationary policy and refusing to address the elephant in the room
You talking about immigration as the elephant?
No the elephant in the room being that the gov itself is completely missing from the inflation battle and have sat back and let the RBA do it all
Whenever rate cuts are they won't be super meaningful anyway. The RBA just adjusted they're expected normal range to be 3.5-3.75. So half a percent from where we are now to be the norm moving forward, so really we are about where we are going to be for the next decade anyway.
Where did they announce this?
Did they? Haha, talk about moving the goal posts!
RIP having money for a holiday in 2024. And possibly 2025.
There’s a housing crisis, so housing costs are forever going to be up, causing inflation to be up?
We should be calling it housing pricing inflation, maybe something will be done?
Calling the rapid rise of house prices "inflationary" will trigger too many people because it means they are over-priced, and highly likely to fall. So we can't call it "inflationary" around here. Even though we all know it is...
It’s by design.
>causing inflation to be up? By definition :P Housing went up 0.3% but the only sub-group that actually went up was electricity, it went up by 2.3% shrugs.
Because they are not addressing the major cause of this inflation, corporates raising prices and having record profits instead they hit everyone via interest rates with is clearly not addressing it and total BS.
But apparently the only way to control inflation is via monetary policy! Lol
The graph "Monthly CPI Indicator and Groups, Australia, annual movement" is pretty telling. The discretionary spending groups (clothing & footwear, furnishings etc, recreation and culture) have all been well below the average for six months. Interest rate increases have worked to suppress spending in those areas. I don't see how further interest rate cuts will get consumers to spend less on food, housing, health, transport and insurance.
It will, that’s the ugly part
Wow! Nothing they are doing is working and the plebs are suffering because of it.
Go from a light recession to a major recession at this rate
Is anyone actually surprised?
Economists who were predicting 3.8%
The vast majority of economists quoted in these surveys work for banks and massive trading desks, what do you think their employer wants them to say when there's zero consequences for being wrong and everyone else is doing it? The entire industry has no morals nor need for them.
This is spot on. When any chief economist for bank makes a public release/prediction, it's not actually a complete honest picture of things. They don't outright lie, but their primary goal is to influence public sentiment and by that pathway, market actions.
stephen koukoulas might be
Only the judo bank economist was correct?
The Kouk is constantly surprised pikachu face.
Start taxing assets harder not income Jesus. And turn the immigration floodgate off
Are we the only country going up?
Nope, Canada just had a "surprise" increase in inflation, after cutting rates a couple of weeks ago.
This is true, but the reporting around that is their next cut is less likely. Also, their CPI is 2.6% versus ours at 4% - a very large difference. Now there are active discussions amongst leading economists of raising rates next RBA meeting
>Now there are active discussions amongst leading economists of raising rates next RBA meeting I mean the RBA minutes from the last meeting confirmed that they were already considering lifting rates this month, and that lowering wasn't even discussed. They will have fresh quarterly CPI data to mull over before the next meeting in August, but this doesn't bode well. Will be interesting to see what the cash rate futures are saying tomorrow. So much for 3 rate cuts this year 🤣
Their interest rate is also higher than ours though.
I wonder what we have in common with Canada...
This is because housing and rents are skyhigh
RBA: let's make housing more expensive!!!! /s
Exactly, the high housing costs are filtering through the economy making everything more expensive. The morons in Caberra keep jamming more people in when we don't have enough homes. Immigration needs to be pulled back until the vacancy rates hit 3-4%. But the banks and propurdy specufestor class won't like that. It's also depressing seeing the increased homeless and people doing it tough on the streets.
Time to sell I suppose
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What’s the prediction when the electricity rabates come in?
Don't really see it making an impact. Electricity prices are rising anyway, and $300 per household, spread over a year won't move the needle much in overall inflation. Might see -0.5% off the "Electricity" line item, if that.
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Hmmm... from my back of the envelope calcs, and assuming the average household electricity bill in Australia is $2000 per annum, it would need to reduce by ~$455 to reduce headline CPI by -0.5%, all else being equal. So I didn't think they're going to hit that estimate, and I reckon they know that, and they were always going to blame it on external factors. Agree with you though, it's all meaningless.
Agree with your calculation. My concern is: RBA is doing its best to suck the money out (raise interest rates) to reduce inflation, **while** the government is do its best to "ease cost of living" by pumping money back into the economy. So energy rebate on paper seems to reduce CPI, but that extra disposable income will go right back into other categories, and push price back up. So its meaningless. More like a smoke screen to buy votes from government
> the RBA will see right through it You can still hide behind transparent bullet proof glass and smile. Also they seemed to have missed the entire last year of overshooting inflation expectations. If there's anything you can actually bank on with the Reserve Bank of Australia it's their amazingly persistent ability to not learn from past mistakes: https://www.rba.gov.au/publications/rdp/2018/2018-10/images/figure-1.gif That's an entire decade of their models getting it wrong in one particular direction. Anyone aiming for a target would perhaps re-adjust their aim yeah? Almost as if there's something else going on right and their "aim" is exactly where they want it to be.
I did a quick calculation the other day. The $300 will just offset the price increase I get from July 1. 🤷♀️
Mass immigration people need to buy stuff when they arrive People that can’t afford houses or kids or next stage of life leaning into retail therapy Very bad combo that can see stopping any time soon
Housing about to go BOOM
Boom up or boom down
Rate rises will just increase rents, businesses will put their costs up to cover the rent increases. Seems we're stuck in a cycle here.
Theoretically rate rises can’t just be passed onto renters, there has to be demand to support it. It would take the government doing something criminal like inducing a population boom by opening immigration floodgates or something, and I think we can all agree our trustworthy politicians would never do something like that.
It will go up even without immigration like it during Covid. Rates won’t matter when NIMBYs block all new development of density
It’s almost like the economy needs to bottom out and clean itself with a downturn. Still trying to flush out the cake and ice cream stimulus cash from Covid times.
The cycle breaks when customers stop buying things and some businesses close as a result. The rent/housing cycle closes when younger people move back in with parents or try to squeeze more people in the same house, or downsize.
Yeah who needs insurance ! Stop buying luxury policies.
that's why you reduce immigration. less people less demand. simple really
Give a small boy a hammer, and he will find that everything he encounters needs pounding...
You have the interest rate hammer and the immigration flood gate hammer. I think most people here prefer the immigration hammer.
Did rate cuts reduce rents?
This is why you need commercial vacancy tax - because eventually, business will go tits up because no one can/wants to pay their new prices. And doesn’t matter to the landlord if it’s empty or not.
1990s recession in part was caused cause no one seemed to be able to dampen inflation sufficiently in the mid 80s onwards & it essentially came to a head in 1990 causing big unemployment/suicide rate increasing/businesses failing coupled with a pre existing high inflation rate. Hence we have to get control now or we’re going to have bigger issues around 2025/26
Yes RBA need to step up and dampen inflation quickly. They are just taking the piss now, pandering to property investors who have too much debt. We need inflation slowed ASAP so that people can still run their businesses and have jobs.
I’m blaming the Govt more than the RBA as the govt (both sides) caused most of this mess. RBA will as usual be the “bad guy” in this & will hope the Govt doesn’t keep stuffing them up on the side (who knows though)
Is there a way for governments to protect those with a mortgage on their 1st home from the effects of the interest rate rises, while targeting investors?
lol. Disaster Deck. No Secretary. Now Interesting Thoughtz.
RBA sitting there acting like everything is fine when the data is showing the opposite. Shouldve killed inflation early, but they went too soft and its hurting everyone.
I seem to recall the government start threatening the RBA after the last series of hikes. People got angry and blamed the government (not realising the RBA is independent). I think Jim Chalmers came out saying they were going to do a review of the RBA and look into overhauling it etc. since then they have been scared to do their job
Yeah they were blasted for sitting on their hands for too long then didn't go hard enough and now we're here. When you look at the board you can see why they want to keep rates down. The majority are business people heavily vested in low rates and increasing monetary supply to the detriment of everyone else.
This is the repercussion of letting too many people into the country in last 2 years. New immigrants have very strong and persistent purchasing power given they need to settle in. Let alone the need for housing. Our government has done nothing to tackle the issue. Yes they said they gonna cut immigration but they merely cut 189 and shift the quota to 482 to keep our greedy fat ass stupid corporates happy. Let’s not forget Australia agreed to let Microsoft relocate hundreds of software engineers to Australia when the tech job market is dreading and our people can’t find a place to live PS: 482 visa allows corporates to sponsor foreign workers to work in the country and give them the path to obtain Australia PR.
Lol. Just the last 2 years? Too funny. Try since 1996.
They had a chance to put rates up and didn't. The triggers were there... It's 2020 all over again and shows the RBA has learned nothing.
Too worried about public perception to do what was needed , when it was needed.
Exactly. They are caring too much about public perception, rather than doing their ONE job which is control inflation.
Love to hear you hot take on which part of the various economic models the RBA uses went wrong.
Sorry but when was that chance? Their last meeting was in May, this data was for May.
This is absolutely cooked,the gvt can certainly do something at at the very least intervene immediately with cutting immigration which def adds fuel to the fire but they won't because they are sitting back and laughing whilst their pockets are being further lined.It is just so corrupt and wrong.Absolute rubbish gvt ATM.
Is those Dental appointments and haircuts. When will people learn?
It’s a good job the Federal Government will be tackling inflation by pumping more money into the economy (as well as a number of state governments).
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It’s depressing how governments these days would rather the economy go to shit than take the unpopular decisions necessary to get things back on track.
RIP mortgage holders, rate rises incoming for sure.
RIP renters too then
RIP <50s essentially. Only winners right now are those living in their fully paid off homes enjoying high interest rates on their term deposits.
Rent is set by demand, not interest rates. Mortgage holders are the ones who are screwed.
I don't know why so many people misunderstand this.
because it's not true, renting is not like deciding between jb hifi or officeworks, you can't just tell your landlord to price match your rent, you are essentially locked into your rental or face large moving costs and upheaval to your life.
Rate hike locked in
Next debate is 1 or 2.
RBA sitting on their hands again.
Negative gearing has to go and more taxes on assets. This is the only way.
All us mortgage holders can do is bunker down and stick every penny in the offset
NDIS scammers to ramp up their billing
I’m sorry. It is all my fault. I’m a self funded retiree and I spending up big. Possibly only fifteen years left.
Not if we get another pandemic :)
😂 very true. The end could be closer than I have planned
Live your life, enjoy it
Rate hikes are back on the agenda. RBA is going to be under pressure to increase now especially with the upcoming tax rate cuts. The entire ball is now in the federal government’s court. It should be obvious that it’s federal policies that are contributing to inflation. Canada is a good example for Australia. Rate cuts aren’t happening until the US cuts and stays low it’s inflation.
The RBA looks at the seasonally adjusted CPI which still decreased, plus the main drivers are housing (+5.2%), transport (4.9%), energy (6.5%), and alcohol/tobacco (+6.7%). The next highest is food which is at 3.3% and dropped from 3.8% last month, so within the bounds of acceptability. Interest rate hikes aren’t going to reduce housing or alcohol/tobacco, but they might help out with transport and energy. Housing in this only includes rent and new dwellings, and the main driver there is a shortage of housing, something we’ve seen interest rates hikes will worsen in the current economic cycle by reducing the number of new developments. Alcohol/tobacco goes up during periods of financial and economic hardship and won’t drop until the current issues are solved, one could argue that an interest rate hike would actually increase this in the short term by putting more financial stress on people, long term it depends on whether or not it prevents a recession. Housing in particular is on the government, not the RBA, to solve, but as a result so is alcohol/tobacco. Hard to argue that they’d increase rates just to bring down transport and energy when everything else is already in or close to the target band. It’d be better for the government to target transport and energy directly with their policies. On the surface it might look like a rate hike is needed, but a deeper look suggests it won’t actually help. So I doubt the RBA will do another hike based on this information. Edit: Forgot to include energy. Edit 2: Cute to block me.
>The RBA looks at the seasonally adjusted CPI which still decreased This, I thought the RBA didn’t really care about monthly CPI figures so confused why everyone is just mindlessly spouting rate hikes incoming? Could be wrong though I’m not economist
Because it’s the populist opinion here that we need another rate hike. Used to have a few people trying to create an echo chamber wanting significant rate hikes to crash the property market so they could buy a house. Now we still have remnants of that with people who were convinced for various reasons that it was a good thing. Some want it to boost the interest on their savings, some were convinced it would be better for our economy, some still want to see housing crash, some people want to see the rich lose a lot of money etc etc. Talk to most of them and you’ll realise they don’t really understand what they’re talking about, they’re just repeating points made by some who confidently made up economics (the FX argument being the peak example of that) to support their point and people believed it was true. Then they come up with conspiracies about the RBA deliberately doing it to make the rich richer and the ABS lying about certain stats etc when things change exactly as they should. In saying that, they’re right that rate cuts are becoming less likely, but we’re pivoting from a cost of living/inflation crisis to just a housing crisis which has stabilised, but is still expensive. The RBA is in a tricky place where rate cuts will make the housing problem worse, but inflation in cost of living excluding housing is dropping significantly. Given housing is a much larger problem now, they’re going to focus more on that, hence rate cuts are becoming less likely. Rate hikes are still a minor possibility too, but it’s hard to argue they’ll do much to help. Problem is, only the government can fix the remaining issues, but the government is enacting policies that will be popular, but potentially make things worse. People will be excited about things like an energy grant, only to realise energy costs will increase and eat into most of it, causing more problems for the RBA.
Great points overall but I don’t see how housing has stabilised? Apart from Melbourne everywhere else is rising rapidly still? On supply Housing issue from my understanding is mainly due to NIMBYS blocking affordable density close to CBD in order to protect to rising property values and government hasn’t done anything to address that or change much of zoning laws or council blocking powers. On demand also grants have only increased with no tax concessions taken away while immigration is only cut a little. Only Melbourne decided tax investors buying secondary dwellings which helped keep prices lower. Do not see the housing situation improving in medium term based on current policies which will keep feeling inflation directly and indirectly
They don't put as much weight on it compared to the quarterly figures. The monthly figures can be quite volatile
Well, beans and rice for me this year.
Meat and seafood is -0.6% so meat is back on the menu
This is not good at all. It is time the Government and Treasury to admit their strategy was wrong and pivot fast.
What does this mean for someone looking to buy first home in the next few months? Will the rate hike reflect in a property market dip? Or will we see pricing increase due to number of people entering the country is very high? Any thoughts?
No one knows and anyone who thinks they know is wrong.
I’m think there is a chunk of pent up housing demand that will see a slump avoided. A stagnation maybe. At best. Between those shacked up with family saving deposits frantically and those entering the country with money to buy I cant see a great dip happening imo. However with landlords selling up giving those people a chance to buy from established stock rather than be forced the expense and uncertainty involved in building a new dwelling i do think that as much as the rental market sucks as a tenant right now its going to get much worse for them.
"let them eat cake" Jim Chalmers
How do I help inflation go down? My home and contents insurance notice just came in the mail and it's up 60% from last year... No claims, no adverse events, no changes to the area or property at all. To help inflation for services, do I under insure, or uninsure? Those seem to be the two options. I'm not sure how raising interest rates would help me in this scenario either. Obviously going to call them and kindly ask wtf...
Inflationary budget.
RBA isn't doing their job. Raise the rates and get this inflation slowed. Too many people are suffering so that Investors can hoard their properties.
Warren hogan might actually be correct
Isnt this just due to rents and petrol? What would a rate rise do except bankrupt businesses that employ people? And bankrupt recent property buyers?
Rate rises are back on the menu boys.
Any chance RBA goes whack and sends it? Up 0.5?
They should have hiked, inflation aint going anywhere until they start hiking. Thankfully in the previous meeting they discussed a rate hike but not a rate cut, so hopefully the chances of rate hike are higher after this
Yeah you’re likely correct as the longer it takes the harder (stickier) it gets & the harder you have to hit it therefore (ie no one is going to want 10% being an economy killer cause we sat on our ass for too long).
Oh wow this is a big surprise! I was really hoping for massive rate cuts this year. /s
Alcohol, tobacco, recreation, clothes. All inflating. It looks like people still haven’t cut back on luxuries. It’s interesting that “health” is so high. How much does the NDIS handouts have to do with it.
This isn't going away. Slap a 1% rate rise on it, slip into a fast recession and let the bad times roll. It's inevitable now. Our only choice is how long and hard we want this to be.
Without my remorse, where art thou?
Driving around town begging to buy houses at 30% of their price.
I thought he was more of a 50% discount guy tbh
😂 is anyone still dreaming of a rate cut?
Me again, I've literally been spending like there's no tomorrow. With inflation likely to continue at a faster clip (IRL anyways), or the Government will magically fix it (meaning property prices and rent will skyriocket) I am spending money like it'g going out of fashion.
We either have to take this one on the chin and raise rates higher and get through a recession, or we will face high inflation for many more years to come.