The great Inflation con.

[Skids]

We hear a lot about inflation and how it’s running out of control, forcing these constant interest rate rises and predictions of doom and gloom.
I never really knew how it was calculated, so I’ve looked into it and found out what measures are used.

In Australia, the CPI is calculated by the Australian Bureau of Statistics (ABS) and published once a quarter.To calculate the CPI, the ABS collects prices for thousands of items, which are grouped into 87 categories (or expenditure classes) and 11 groups. Every quarter, the ABS calculates the price changes of each item from the previous quarter and aggregates them to work out the inflation rate for the entire CPI basket.

https://www.rba.gov.au/education/resour ... %20quarter.

What’s in the basket? This is from 2021.


Housing = 23%
Food & beverage (non alcoholic) = 17%
Transport = 11%
Recreation & Culture = 9%
Furnishings, Household equipment & services = 9%
Alcohol & tobacco = 9%
Health =7%
Insurance & financial services = 6%
Education = 5%
Clothing/footwear = 3%
Communication = 2%

Ok, so housing prices (which includes rent) are red hot now. House prices continue to increase… despite the interest rate increases.

We hear about fuel costs driving up food prices and service costs yet world oil prices are at their lowest in the last 12 months.
Not to mention the cost of food items on world commodity markets… take a look at these;
From the same time last year.

OIL DOWN 39%

Wheat DOWN 46%
Milk DOWN 36%
Oats DOWN 46%
Corn DOWN 14%
Soy beans DOWN 20%
Cheese DOWN 25%
Coffee DOWN 23%
Canola DOWN 43%
Sunflower oil DOWN 60%
Butter DOWN 35%
Beef DOWN 14%
Eggs DOWN 43%
Poultry DOWN 22%
Pork DOWN 24%
Tea DOWN 4%
Rice DOWN 1%

Sure, a few things have risen; Sugar is up 29%, Orange juice is up 53%, Cocoa is up 21%, Spuds are up 110% & salmon is up 15%.

https://tradingeconomics.com/commodities

Why is the trolley from Coles, that used to be about $150 to fill, now closer to $300?
Why isn’t petrol $1.10/litre, which is what it should be with current world oil prices and the AUD rate?

It’s pure greed and it is just let run rampant… why?

What am I missing?



https://www.mining.com/web/commodity-cr ... d-for-now/


From copper to wheat to natural gas, the cost of some of the world’s most important products is crashing, bringing long-awaited relief for consumers that were stung by last year’s soaring prices.


The commodity crunch unleashed by Russia’s invasion of Ukraine has taken a sharp reversal, with a Bloomberg gauge dropping more than 10% since the start of the year to the lowest since 2021.

Even oil and its derivatives have gotten cheaper, despite an agreement by producing countries to curb crude output. Diesel prices in the US have fallen more than 30% from their 2022 peak, providing relief for truckers, farmers and consumers in the world’s largest economy.

[think positive]

I’ve been shocked at the supermarket prices, I now look for 1/2 price specials on what we use and stock up! It’s scary

[stui magpie]

The price of Diesel is ridiculous. Wonder how much the Government Fuel Excise contributes to that?

All the rain last year buggered a lot of crops causing price increases, but that should all be recovered now. The only reasons stuff in supermarkets could be so expensive is because the price of Diesel, transporting stuff around in trucks, is blowing out costs, or the Supermarket chains are profiteering.

The only time I look at prices when grocery shopping is in the meat section.

[think positive]

my eldest took a look at the figures last night, and the ramifications, and instead of the extra on the mortgage, which is still locked for another 2 years, she completely paid off her remaining HECs bill before the interest hit! smart kid!

[Skids]

The price of Diesel is ridiculous.

The only time I look at prices when grocery shopping is in the meat section.

How is the price of meat over there?
I only buy from my local butcher, just got a couple of scotch fillets @ $55/kg, eye fillet was $65/kg, T bone $42/kg and rump was $35/kg.

[stui magpie]

^

Ouch. price of Steaks here is about half that.

[watt price tully]

^

Ouch. price of Steaks here is about half that.

Steak varies:

Shops, suburbs and then by quality and cut.

Grass fed and organic are other variables.

[Skids]

^

Ouch. price of Steaks here is about half that.

Steak varies:

Shops, suburbs and then by quality and cut.

Grass fed and organic are other variables.

Yes, probably not a good measure. I just looked at Coles meat prices and they are substantially cheaper than the butcher, but from previous experience you get what you pay for. I don't eat steak that often anymore, but when I do, I want it to be quality.

A couple of things that stand out on the shelves is the price of; butter, that's almost doubled in the last few months as has the 4 litre tin of olive oil... you once could get a quality one on special for $20, now they're never under $40.

That's the thing, the profiteering of the big supermarkets and oil companies is the driver for the big CPI increases.
Isn't there supposed to be some consumer price watchdog that oversees this?

[Dark Beanie]

Most people shop at a supermarket for convenience and don't bother to shop around, so Coles & Woolies have a captive audience.

https://www.news.com.au/finance/money/c ... 2bb51126ae

I shop at both Coles & Woolies and at different locations depending on what else I am doing. Woolies at Chadstone usually has good markdowns or midweek specials, Carnegie is closer so go for convenience. HAs to go to Malvern last weekend for somehting and shopped there - the usual Malvern tax on prices.

Try and shop at the Asian greengrocers as their fruit and veg is usually cheaper. My local butcher is reasonably priced and I go there as it is around the corner and I know stuff is fresh. Got some pork rump steaks for $19 a kilo last week (apparently pigs are cheap at the moment).

[Skids]

[stui magpie]

Most people shop at a supermarket for convenience and don't bother to shop around, so Coles & Woolies have a captive audience.

https://www.news.com.au/finance/money/c ... 2bb51126ae

I shop at both Coles & Woolies and at different locations depending on what else I am doing. Woolies at Chadstone usually has good markdowns or midweek specials, Carnegie is closer so go for convenience. HAs to go to Malvern last weekend for somehting and shopped there - the usual Malvern tax on prices.

Try and shop at the Asian greengrocers as their fruit and veg is usually cheaper. My local butcher is reasonably priced and I go there as it is around the corner and I know stuff is fresh. Got some pork rump steaks for $19 a kilo last week (apparently pigs are cheap at the moment).

I'm similar, shop at Woolies or Coles depending where I am, but I also go to different Woolies depending what i'm after because I've noticed they have different products in different shops depending on the local demographic

[roar]

The price of Diesel is ridiculous.

The only time I look at prices when grocery shopping is in the meat section.

How is the price of meat over there?
I only buy from my local butcher, just got a couple of scotch fillets @ $55/kg, eye fillet was $65/kg, T bone $42/kg and rump was $35/kg.

If it's grass fed, about the same or a touch less.

[Skids]

https://www.crikey.com.au/2023/06/08/re ... est-rates/

[pietillidie]

You're right to an extent and in egregious cases, but supply will still be flaky in many categories because past instability has messed up stable assumptions, sending planning completely batty. Meanwhile, many firms will be dealing with past debt and/or future uncertainty, making them 'greedy' but in a protective way.

The best way to show you're right is to look at the finances of firms who have benefitted from the increased revenue yet mysteriously managed to make good profits at the same time. If prices adjusted synchronously, they'd have made the same or less profit on greater turnover.

But don't forget, many of them are coming off bad Covid numbers and are now indebted. So many of those won't think they're being greedy, and others will think they're barely surviving still.

Products that take quite a bit of supply planning can have a lot of lag even in good times, while no sane business would part with profits until they're sure supply has re-settled again. At one extreme, take semi-conductors. Even without inflation, they have over-supply and under-supply cycles because it's such a huge task to invest, plan, deliver and follow-up, so semi firms are always under-mobilising or over-mobilising supply. The problem they're solving is just too hard to get right.

With Russia and China being flaky (the former due to derangement, the latter still in a post-Covid mess), a further layer of disequilibrium is thrown into the mix.

Then, add talk of recession on top of that flaky background. So, imagine you're a business looking forward and thinking: 'damn, this might really go into deep recession by the end of the year'.

Are you really going to choose to weaken your financial footing as supply kind-of-maybe stabilises, or are you going to build in a future-looking buffer on the back of being hammered through Covid and potentially again next year?

It's not as simple as you think. That's a lot of planning and management uncertainty. So, while you can find some scumbag industries riding the poor, most companies are half forced to do so due to uncertainty and scarring, if that makes sense.

Ask people who do demand planning. They'll tell you they get it wrong at the best of times, but I can guarantee their heads would be exploding right now. So, I think it's genuinely one of those cases where firms are being frced to be irrationally greedy. Regulators, meanwhile, will know that, and know they can't move too quickly because their assumptions can't be trusted, either. So, they might move this week and things change in three months. Then, they'll look like real dicks and wear the blame for moving too soon.

That leaves central banks to make the big calls.