INFLATION (FINANCE) – AUSTRALIA

Workers miss out as gulf between wages and inflation widens

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Original article by Sezen Bakan
The New Daily – Page: Online : 6-Mar-23

Seek senior economist Matt Cowgill says Australia may have already seen the peak of its salary growth, with the Seek Advertised Salary Index rising by just 0.2 per cent from December to January; it was the second month in a row that growth had slowed. Real wages had their biggest fall on record in 2022, while Greg Jericho from the Australia Institute’s Centre for Future Work claims the link between company profits and wages has weakened; he contends that industrial relations policy for the last 20 years has been all about low wages growth

CORPORATES
SEEK LIMITED – ASX SEK, THE AUSTRALIA INSTITUTE LIMITED. CENTRE FOR FUTURE WORK

Inflation Expectations dropped 0.7% points to 5.3% in January 2023 – the largest monthly fall on record

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Original article by Roy Morgan
Market Research Update – Page: Online : 22-Feb-23

In January 2023, Australians expected inflation of 5.3% annually over the next two years, down 0.7% points from December 2022. This is the largest monthly fall on record for Inflation Expectations and the largest two-month fall (-1.2% points). The early indications in February are that the decline in Inflation Expectations seen in January 2023 has continued, with the latest weekly reading falling to only 5.1%. A look at Inflation Expectations on a State-based level shows that the decline in Inflation Expectations was nation-wide in January; Inflation Expectations are now highest in Victoria at 5.5% (down 0.4% points from a month ago), Queensland at 5.5% (down 0.8% points) and South Australia at 5.5% (down 0.9% points). Looking at the Country/City divide shows large falls for each with Inflation Expectations in Country Areas at 5.8% (down 0.8% points on a month ago), still far higher than in Capital Cities at 5.1% (down 0.6% points). The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 4,900 Australians aged 14+ per month over the last decade and includes interviews with 5,984 Australians aged 14+ in January 2023.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

RBA’s rate rises to run for months

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 8-Feb-23

Reserve Bank of Australia governor Philip Lowe has signalled that further official interest rate increases are likely in order to bring inflation under control. The RBA increased the cash rate by 25 basis points to 3.35 per cent on Tuesday, in a move that was widely expected. Many economists now forecast that the cash rate will peak at 3.85 per cent in April, compared with previous expectations of 3.6 per cent. Lowe has emphasised that the RBA will do "what is necessary" to return inflation to its target range of 2-3 per cent. Lowe has conceded that the RBA’s preferred measure of underlying inflation is higher than expected at 6.9 per cent. Meanwhile, new data shows that Australia’s trade surplus fell to $12.2bn in December.

CORPORATES
RESERVE BANK OF AUSTRALIA

Inflation Expectations dropped 0.5% points to 6.0% in December 2022 and are far higher in Country Areas

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Original article by Roy Morgan
Market Research Update – Page: Online : 1-Feb-23

In December 2022, Australians expected inflation of 6.0% annually over the next two years, down 0.5% points from a decade high of 6.5% reached in November. Inflation Expectations in December are 1.2% points higher than a year ago and up 2.4% points from two years ago. Inflation Expectations are now significantly below the ABS CPI figures for the year to December 2022, which showed consumer price inflation reaching a 32-year high of 7.8%. The early indications from this year are that the decline in Inflation Expectations at the end of 2022 has continued, with the latest weekly reading falling to only 5.1%. A deeper look at Inflation Expectations by region shows that expectations are consistently far higher in regional areas than in the Capital Cities. At a national level Inflation Expectations were at 6.7% in the Country Areas, compared to 5.6% in the Capital Cities. The largest gap is in Victoria, with Inflation Expectations at 7.4% in Country Victoria compared to only 5.4% in Melbourne. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source, which has interviewed an average of 4,700 Australians aged 14+ per month over the last decade and includes interviews with 5,964 Australians aged 14+ in December 2022.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Australia’s softening inflation unlikely to spell an end to interest rate hikes

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Original article by Peter Hannam
The Guardian Australia – Page: Online : 25-Jan-23

The Australian Bureau of Statistics will release inflation data for the December quarter on Wednesday. Many economists expect the annual headline inflation rate to have peaked at 7.5 per cent in the quarter, compared with 7.3 per cent in the previous three months. The trimmed mean is the Reserve Bank of Australia’s preferred measure of inflation; the general consensus of economists is that this will be 6.4 per cent in the December quarter, compared with 6.1 per cent in the previous quarter. However, the ANZ Bank expects a headline inflation rate of 7.7 per cent and a trimmed mean of 6.7 per cent. The bank contends that the RBA is likely to increase the cash rate three times by May, given that both measures will still be well above its target range of 2-3 per cent.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Real wages growth story is an ugly one

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Original article by Patrick Commins
The Australian – Page: 4 : 18-Jan-23

Treasurer Jim Chalmers has talked up the fact that wages grew by 3.1 per cent in the year to November. This was the fastest growth in wages since September 2013, and Chalmers has highlighted the fact that average wage growth has been just 2.3 per cent annually over the last decade. However, an inflation rate of 7.3 per cent means that real wages shrank by 4.2 per cent in the year to September, and average annual real wage growth over the last decade was just 0.4 per cent. The Treasury and the Reserve Bank do not anticipate real wage growth until 2024.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

Inflation tipped to rise to highest level in 32 years

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Original article by Emma Rapaport
The Australian Financial Review – Page: 29 : 29-Nov-22

The latest monthly inflation data will be released on Wednesday. Catherine Birch from the ANZ Bank expects the data to show that the headline inflation rate rose from 7.3 per cent in September to 7.8 per cent in October. Birch also forecasts that the Reserve Bank’s preferred measure of trimmed mean inflation will rise from 5.4 per cent to 5.9 per cent. The ANZ expects the quarterly headline inflation rate to peak at eight per cent in the final three months of 2022 and remain above the central bank’s target range of 2-3 per cent until the end of 2024. It also anticipates that the Reserve Bank will begin to ease monetary policy in November 2024.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA

NZ Reserve Bank nails our RBA’s failure

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Original article by Terry McCrann
Herald Sun – Page: 49 : 24-Nov-22

Reserve Bank of Australia governor Philip Lowe has stated that wage outcomes must be consistent with the return of inflation to the central bank’s target range of 2-3 per cent. Increasing wages in line with the inflation rate would inevitably result in large-scale job losses and further boost inflation. Allowing inflation to remain well above the target range for too long would also heighten the risk of a wage-price spiral. The Reserve Bank of New Zealand recognises these risks; its cash rate was increased by 75 basis points on Wednesday, and it seriously considered a one per cent increase. In contrast, the RBA increased the cash rate by just 25 basis points in November, despite the inflation rate in both countries being nearly identical. NZ’s cash rate is now 4.25 per cent, but Australia’s cash rate will still be just 3.1 per cent if – as expected – the RBA announces a 25 basis point increase in December.

CORPORATES
RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND

Economists tip supersized Cup day rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 11 : 28-Oct-22

Westpac’s chief economist Bill Evans expects the Reserve Bank of Australia to increase the cash rate by 50 basis points in November, in response to the latest inflation data. Westpac now anticipates that official interest rates will peak at 3.85 per cent, a view shared by the Commonwealth Bank. National Australia Bank and ANZ in turn expect interest rates to peak at 3.6 per cent and 3.1 per cent respectively. Meanwhile, financial markets have priced in a 25 basis point increase in November.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

No doubt interest rates will continue to climb: RBA

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Original article by Ronald Mizen
The Australian Financial Review – Page: 2 : 19-Oct-22

The Reserve Bank of Australia’s deputy governor Michele Bullock says inflation is still too high and further rises in the cash rate will be necessary in order to return it to the RBA’s target range of 2-3 per cent. Bullock has told the Australian Finance Industry Association’s annual conference that the RBA believes that it can reduce the inflation rate while avoiding a recession and preserving most of the jobs that have been created in recent times. Meanwhile, the minutes from the RBA’s latest meeting show that the board was of the view that slowing the pace of rate rises in October will give it time to assess incoming economic data.

CORPORATES
RESERVE BANK OF AUSTRALIA