Australia's inflation rate has picked up, but that (mostly) is not a sign that inflation really is increasing, but is rather a result of state initiatives to reduce electricity bills with subsidies. When subsidies were introduced, headline inflation fell, and now they've expired, it's risen.
However, it's above the top of the RBA's inflation band (2 - 3 per cent), so the chatter is that the next rate change will be up instead of down. I'm not so convinced. Even the RBA* can't ignore the obvious signs that the economy is slowing. And it's quite likely that the Federal government will introduce a new subsidy for electricity bills in the next budget in March.
The cost of electricity is a hot topic, with the Right blaming renewables, and everybody else pointing out that prices are set by the highest-cost supplier, which is gas. So the sort-of-left-ish government, the Australian Labor Party (ALP) wants to defuse the agitation from the "Liberal" (= right-wing) opposition about the shift to renewables, and will prolly introduce a subsidy to cut the pain of high electricity prices while they wait for their painfully slow roll-out of renewables to take effect.
Coming back to the economy, my next post will be about how the Ozzie economy appears to have started to slow again, so it would be perverse of the RBA to raise rates. But then, they haven't exactly covered themselves with glory over the last few years, so who knows.
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| The ABS (Australian Bureau of Statistics) has now switched completely from quarterly CPI indices to monthly. The monthly indices are now the official CPI. |
*RBA = Reserve Bank of Australia
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