Underlying inflation in Australia continues to decline

Today (November 27, 2024), the Australian Bureau of Statistics (ABS) released the latest – Monthly Consumer Price Index Indicator – for November 2024, which showed that the annual underlying inflation rate, which excludes volatile items continues to fall – from 3.5 per cent to 3.2 per cent. The overall CPI rate (including the volatile items) rose slightly from 2.1 per cent to 2.3 per cent, but that was mostly due to the timing of government electricity rebates between October and November. In other words, the slight rise cannot be interpreted as signalling a renewed inflationary spiral is underway. All the indicators are suggesting inflation is declining and the major drivers are abating. The overall rate has been at the lower end of the RBA’s inflation targetting range (2 to 3 per cent) for four successive months now, yet the RBA continues to claim they fear a wages breakout and that unemployment needs to increase. The RBA has gone rogue and its public statements bear little relationship with reality. It is clear that the residual inflationary drivers are not the result of excess demand but rather reflect transitory factors like weather events, institutionally-driven price adjustments (such as indexation arrangements), and abuse of anti-competitive, corporate power. The general conclusion is that the global factors that drove the inflationary pressures have largely resolved and that the outlook for inflation is for continued decline. There is also evidence that the RBA has caused some of the persistence in the inflation rate through the impact of the interest rate hikes on business costs and rental accommodation.

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The assessment that Greece has been an ‘astonishing success’ beggars belief

Today, I consider the Greek situation, the decision by the UK Chancellor to further deregulate the financial services sector and then to calm everyone down or not, some music. The Financial Times published an article (December 12, 2024) – The astonishing success of Eurozone bailouts – which basically redefines the meaning of English words like ‘success’. Apparently, Greece is now a successful economy and that success is due to the Troika bailouts in 2015 and the imposition of harsh austerity. The data, unfortunately, doesn’t support that assessment. Yes, there is economic growth, albeit from a very low base. But other indicators reveal a parlous state of affairs. At least, this blog post finishes on a high note. Please note there will be no post tomorrow (Wednesday) as I am travelling all day. I will resume on Thursday.

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The federal government would sack the RBA Board and Governor except it is too busy jumping at its own shadow

It’s Wednesday and as usual I cover a few topics briefly rather than provide a deeper analysis of a single issue. Today, I consider yesterday’s RBA monetary policy decision which held interest rates at elevated levels despite the inflation rate dropping towards the lower range of its targetting band. The RBA has lost credibility and the federal government should sack the RBA Board and Governor. The problem is that the federal government is too busy jumping at its own shadow to actually take any meaningful decisions about almost anything. I also reflect on the recent decision by the Nobel Committee to award the Peace Prize to the – Hibakusha – which reminds us of the devastation that nuclear arms can (and did) cause. Some other matters then precede today’s great music segment.

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Australian inflation episode well and truly over – please tell the RBA to stop trying to push unemployment up further

Today (November 27, 2024), the Australian Bureau of Statistics (ABS) released the latest – Monthly Consumer Price Index Indicator – for October 2024, which showed that the annual inflation rate was steady at 2.1 per cent and is now at the lower end of the RBA’s inflation targetting range (2 to 3 per cent). It is clear that the residual inflationary drivers are not the result of excess demand but rather reflect transitory factors like weather events and abuse of anti-competitive, corporate power (travel fares etc). The general conclusion is that the global factors that drove the inflationary pressures have largely resolved and that the outlook for inflation is for continued decline. There is also evidence that the RBA has caused some of the persistence in the inflation rate through the impact of the interest rate hikes on business costs and rental accommodation.

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RBA monetary policy decision defies logic

Well, as I write this late in the Kyoto afternoon, Donald Trump has just made a victory speech after an incredible day of election outcomes unfolding. As I wrote last week, the only moral and reasonable position for a progressive to take in this election would be to vote for Jill Stein and send a strong message to the two major candidates that they were totally unelectable. I reject the claim that that strategy would just deliver a victory for Trump. However, the Democrats can’t really deflect blame like that for their horrendous policies in relation to the Israel issue and more. So the US faced a Hobson’s choice and I hope progressive parties elsewhere heed the message of Harris’s loss. But today I want to write a bit about yesterday’s (November 5, 2024) decision by the Reserve Bank of Australia (RBA) to hold their cash rate target interest rate (the policy rate) constant. With inflation falling quickly, there is no logic to that decision. The RBA keep claiming that there is excess demand in the economy but that is an unsupportable claim given the evidence.

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State of Climate 2024 Report signals worse is coming – like very nearly now

This is my Wednesday blog post on a Thursday, given that I spent yesterday dealing with Australia’s latest CPI data release. So today I consider a range of topics in less detail, which is my usual Wednesday practice. Today, I comment on the latest ‘State of Climate 2024’ Report just released in Australia. I also consider the view that underneath all the regional wars at present where war lords fight to gain control of failed states is a voracious surplus extraction system we just happen to call Capitalism. And then some other items that have interested me this week. And a music segment.

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The EU is in terminal decline

Some Wednesday snippets. First, I juxtapose the political machinations that the EU President is engaged in to consolidate and expand her power within the European Commission with the reality that Member State governments are becoming dysfunction because social instability and political extremism are rife. Then I reflect on my experience as Chancellor of Britain – a great success I should say, although I was told I had broken all the rules. It tells one how stupid the rules are. Then, finally, some music to enjoy.

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Video of Australian book launch of ‘Modern Monetary Theory: Bill and Warren’s Excellent Adventure’

It’s Wednesday and as usual I am writing about a few issues rather than providing a detailed analysis of a specific issue. Today, I publish the video of Australian launch of our new book – Modern Monetary Theory: Bill and Warren’s Excellent Adventure. I also comment on the current situation in the Middle East and finish with some great music from the rather odd collaboration between Oscar Peterson and Stéphane Grappelli in the early 1970s.

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Shipping disruptions unlikely to precipitate another inflation surge

It’s Wednesday and while I usually have a few topics to discuss, today I am concentrating on the recent disruptions to shipping channels and the likely impact on inflation. I was also hoping to post a video of the recent launch of my new book with Warren Mosler in Melbourne on September 12, 2024 but the editing is not quite finished. If we analyse the shipping data it is quite clear that global shipping channels are being seriously disrupted by a number of factors. Most particularly, the Suez Canal is becoming unusable while the Panama Canal is struggling with water levels following a devastating drought. The impact of the former has been for major shipping companies to divert their movements around the Cape of Good Hope, adding time and costs to the freight deliveries. If we reflect on the implications, the most reasonable conclusion at this stage is that these shifts in shipping patterns are unlikely to precipitate another surge in inflation. There might be some temporary cost and price shocks but I cannot see them persisting. And, there is nothing here that is relevant to central bankers.

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