INFLATION (FINANCE) – AUSTRALIA

Bullock’s red flag on inflation

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Original article by Patrick Commins
The Australian – Page: 1 & 5 : 8-May-24

Reserve Bank of Australia governor Michele Bullock says she is "alert and vigilant" to the risk of inflation staying too high for too long. The RBA left the cash rate on hold at 4.35 per cent on Tuesday, and Bullock says the RBA board believes that it is at the right level to return inflation to the target range of 2-3 per cent in 2025. However, Bullock adds that doing so is likely to be a bumpy ride, while she has flagged the possibility of further interest rate increases if services inflation remains above the central bank’s target range. Meanwhile, Bullock has emphasised the need for Treasurer Jim Chalmers to ensure that the budget on 14 May is not inflationary.

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

Chalmers to fight inflation, then spend

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Chalmers to fight inflation, then spend

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

RBA’s next move will still be a cut: investors

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Original article by Cecile Lefort
The Australian Financial Review – Page: 29 : 30-Apr-24

The US Federal Reserve is now widely tipped to deliver its first interest rate cut in December, after the latest inflation data dampened expectations of a rate cut in June. Meanwhile, bond traders have now priced in a 50 per cent chance that the Reserve Bank of Australia will increase the cash rate to 4.6 per cent by September. Both central banks are expected to leave interest rates unchanged at their upcoming board meetings. Kapstream Capital portfolio manager Kris Bernie still expects the RBA to reduce the cash rate, although he says this is now likely to be delayed until 2025.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, KAPSTREAM CAPITAL PTY LTD

Inflation means tax cuts could pose a risk

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Original article by Sarah Ison, Lydia Lynch
The Australian – Page: 6 : 26-Apr-24

AMP’s chief economist Shane Oliver says the higher-than-expected inflation data for the March quarter means the revised stage-three income tax cuts present a greater economic risk than when they were first announced. He contends that the tax cuts to be announced in the 14 May budget would have been less of a risk to the economy if inflation had been falling. Veteran economist Chris Richardson notes that it has been known for a long time that the tax cuts will be inflationary. Consumer prices rose by one per cent in the March quarter; this compares with economists’ expectations of 0.8 per cent growth, and the 0.6 per cent increase in the December quarter.

CORPORATES
AMP LIMITED – ASX AMP

RBA to increase cash rate to 5.1pc, says top forecaster

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 26-Apr-24

The consensus of economists is that the Reserve Bank of Australia will upgrade its near-term inflation forecast in May, following the release of the latest CPI data. A stronger-than-expected headline inflation rate of one per cent for the March quarter – and 3.6 per cent in the year to March – has also prompted economists to forecast that the RBA will delay its first official interest rate cut. However, while most economists expect the RBA’s next move will be a rate cut, Judo Bank’s chief economic adviser Warren Hogan has forecast that it will increase the cash rate three times in 2024, from 4.35 per cent at present to 5.1 per cent. He had previously anticipated that the first rate cut would occur in early 2025.

CORPORATES
RESERVE BANK OF AUSTRALIA, JUDO BANK PTY LTD, JUDO CAPITAL HOLDINGS LIMITED – ASX JDO

Inflation Expectations in late April are at 5.0% – up slightly from the month of March (4.9%)

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Original article by Roy Morgan
Market Research Update – Page: Online : 24-Apr-24

The latest weekly Inflation Expectations are at 5.0% for the week of April 15-21. This figure is in line with the average over the last 12 weeks of surveying since late January – also of 5.0% – and up slightly from the month of March. A look at the monthly Inflation Expectations for March 2024 showed the measure at 4.9% for the month, a decrease of 0.1% points on February (5.0%). The figure of 4.9% for the month of March 2024 was the lowest monthly inflation figure since January 2022 (4.9%). Looking back over the last few months, since mid-December 2023, weekly Inflation Expectations have moved in a narrow band of 4.8% to 5.3%. After March ended, Inflation Expectations moved higher through the first few weeks of April and are now marginally higher in late April. A likely driver of the increases in Inflation Expectations during April is the recent strength in the retail price of petrol, which is now over $2 per litre. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 5,100 Australians aged 14+ per month over the last decade, and includes interviews with 5,999 Australians aged 14+ in March 2024.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

5pc minimum wage rise would keep rates high

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Original article by David Marin-Guzman
The Australian Financial Review – Page: 7 : 27-Mar-24

The Australian Chamber of Commerce & Industry wants the Fair Work Commission to limit the annual minimum wage rise to no more than two per cent. The employers’ group contends that inflation is expected to fall to three per cent, productivity is declining and the FWC has overcompensated for inflation in previous minimum wage decisions. The ACTU in turn is seeking an above-inflation minimum wage increase of five per cent, which ACCI CEO Andrew McKellar says would ensure that interest rates remain high. He adds that wage costs are still a problem for small and medium enterprises, and a large increase in the minimum wage would have an impact on hiring decisions.

CORPORATES
AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY, AUSTRALIA. FAIR WORK COMMISSION, ACTU

Inflation Expectations in late March are at 5.1% – up slightly from the month of February (5.0%)

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Original article by Roy Morgan
Market Research Update – Page: Online : 27-Mar-24

The latest weekly Inflation Expectations are at 5.1% for the week of March 18-24. This figure is in line with the average over the last 15 weeks of surveying since early December – also of 5.1% – and up slightly from the month of February. A look at the monthly Inflation Expectations for February 2024 shows the measure at 5.0% for the month, a decrease of 0.1% points on January (5.1%). The figure of 5.0% for the month of February was the lowest monthly inflation figure since January 2022 (4.9%). Looking back over the last few months, since mid-December 2023 weekly Inflation Expectations have moved in a narrow band of 4.8% to 5.3%. After February ended, Inflation Expectations dipped in early March, but have now recovered and have moved higher in late March. A likely driver of this week’s increase in Inflation Expectations is the recent strength in the retail price of petrol which is now over $2 per litre. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source, which has interviewed an average of around 5,100 Australians aged 14+ per month over the last decade, and includes interviews with 5,998 Australians aged 14+ in February 2024.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

ACTU’s 5pc wage push sets up showdown

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Original article by David Marin-Guzman
The Australian Financial Review – Page: 1 & 6 : 26-Mar-24

The ACTU will use its submission to the Fair Work Commission’s annual minimum wage review to call for an above-inflation increase of five per cent. This would increase the minimum wage to $24.39 an hour, or $48,200 a year. ACTU secretary Sally McManus contends that workers on the lowest pay are hardest hit by inflation, and they need a pay rise of five per cent to make up for the real wage losses over the last several years. The Australian Chamber of Commerce & Industry will in turn push for the minimum wage to be increased by no more than two per cent, following a large rise in both the minimum wage and award wages in 2023.

CORPORATES
AUSTRALIA. FAIR WORK COMMISSION, ACTU, AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY