So it’s finally showing up in the numbers….. inflation is officially now a problem.
Figures released today by the Aussie Bureau of Stats (ABS) finally confirms what we’ve warning for over 8 months. Prices on goods have increased, are likely to continue increasing and the current state of play is not transitory. Governor Philip Lowe and his mates at the RBA somehow missed the signals. They told us “inflation is just a passing fad” it’s the transitionary phase of price increases between what we call the “I’m almost out of cash to buy lattè” phase and the “I’m completely out of cash to buy lattè….can you lend me a redback until the next government subsidy comes in” phase.
Seriously though, we cannot expect the people running our economy to get it right all the time. Or half the time. In fact, we should be totally ok with 25% of the time if you ask me. They’re not filling their helicopter with fuel for the daily commute. No, that’s the pilots job. I’m also confident they don’t land at the 7 Eleven on the way to the vault and buy coffee, milk and biscuits for smoko either so the only way they could possibly know the cost of living is to wait for the ABS to provide them the stats.
The RBA’s comfort zone for inflation is between 2 to 3%
Figures released today show us at a whopping 5.1% this is the highest it’s been since the middle of the Global Financial Crisis, circa 2009!!!!
But the cost of your stuff going up is not the worst of it. Eight months ago Lowe announced that interest rates wont be going up anytime soon and in fact told us that things were looking peachy until 2024. This sent people into a property buying frenzy with record Lowe interest rates meaning their mortgage payments will be Lowe for a while. But Lowe and behold about 4 months ago we hear Lowe say “um…. no I might have gotten that wrong and interest rates might have to go up if inflation kicks in. Well inflation HAS kicked in so watch for Lowe’s announcement on interest rates going up next week I reckon.