September CPI figures are out

[Twitch]

Hot off the press

0.7% for quarter
1.7% for year

I think this is good news for interest rates. <--- forget I said that

 

[Belu]

yeah i cant see RBA raising rates off that, good to see a slight easing as well.

 

[oc1]

I believe you may have misread the data. The underlying annualised rate is 2.9 per cent - the top end of the RBA's preferred band of 2-3 per cent. Rates will increase next months.

 

[MarkB]

Remember guys, the RBA is looking for downstream inflationary pressures - not what's in the rear view mirror.

M

 

[MarkB]

I believe you may have misread the data. The underlying annualised rate is 2.9 per cent - the top end of the RBA's preferred band of 2-3 per cent. Rates will increase next months.

I read the data the same way as they do.

2.9% is the annual figure quoted here, but that was for the last FY (June 06 to June 07).

M

 

[s_t]

0.7 for September quater = 0.7*4 = 2.8%/yr
1.9% for 3 quarters to September = 1.9/3*4 = 2.5%

Depends on time period as to result. Stockmarket seems happy- moving up as a result.

 

[MarkB]

NB - the RBA has just updated their site with the 1.9% CPI figure to September 2007.

(In case there is any further doubt or conjecture)

M

 

[twobobsworth]

Excluding fruit, veg & petrol CPI adjusted goes to 2.6%.

 

[s_t]

http://www.abc.net.au/news/stories/2007/10/24/2068774.htm?section=justin

So what is the underlying inflation figure the reserve bank uses? Whatever it is, up 1% for hte quater is 4% a year!

 

[singingtheblues]

interest rates

aussie $ up - markets expect an interest rate rise -

 

[hb2]

Thanks Twitch

Hey...its great if you've got kids in Childcare or buy TVs etc.....

but what about the rest of us

http://www.abs.gov.au/AUSSTATS/[email protected]?opendocument

OVERVIEW OF CPI MOVEMENTS

Significant contributors to the increase this quarter were fruit (+9.6%), vegetables (+7.9%), deposit and loan facilities (+2.2%), rents (+1.6%), other financial services (+2.3%), house purchase (+1.0%), electricity (+4.3%), overseas holiday travel and accommodation (+4.2%), property rates and charges (+4.5%), water and sewerage (+5.5%), domestic holiday travel and accommodation (+1.8%) and other motoring charges (+2.6%).
The most significant offsetting price falls this quarter were for child care (-33.4%), automotive fuel (-3.7%), pharmaceuticals (-4.5%), audio, visual and computing equipment (-2.5%) and furniture (-1.5%).



Whats you personal inflation rate?

 

[letiha]

Well I think Child care is abosolute BS, everyone I know who has kids in child care had their fee's go up the full 13% that the Child Care benifit increased by, I was mean to save $20 a week per child, instead I save 50 cents, but the day care fees total fees increased $60.

 

[TJamesX]

Important to look at quarterly rates not the retrospective annual figure;

http://www.rba.gov.au/Statistics/measures_of_cpi.html#quarterly

The important ones are "weighted median" and "trimmed mean" (RBA's prefered measure) as these measure the underlying rate of inflation. Both of these measures have had high results in the past 2 quarters and especially this month... weighted median is at 1% (thats 4% annualised) and trimmed mean is at 0.9% (3.6% annualised)

TJ

 

[FHB]

The drops in Childcare costs are due to changes in the way tax rebates are paid back. So the govt have engineered a drop in headline cpi there. Tricky!

The problem is the acceleration of quarterly readings of core inflation. With some of the lower readings from earlier this year due to be replaced by big .9% reading for this quarter and the next couple quarters, the RBA is going to have to step on the brakes a little harder. Could see a back to back rise, really need to see what they say in a couple weeks.

 

[trendsta]

The drops in Childcare costs are due to changes in the way tax rebates are paid back. So the govt have engineered a drop in headline cpi there. Tricky!

The problem is the acceleration of quarterly readings of core inflation. With some of the lower readings from earlier this year due to be replaced by big .9% reading for this quarter and the next couple quarters, the RBA is going to have to step on the brakes a little harder. Could see a back to back rise, really need to see what they say in a couple weeks.

The money supply is expanding ever faster... with nothing backing paper money and supply running rampant, in conjunction with high debt levels, easy credit access, growing economy, low unemployment, the inflation train is just running out of control ..

Only products mfg in China are dropping .. with Yuan partially pegged to USD China will be hit with inflation as well, as most of their imports (e.g. raw materials, oil, etc) are denominated in USD which are rising ... Coming year is shaping up nicely .. US Fed reserve and Chinese govt dont want to do anything with inflation due to their respective circumnstances .. This is going to be awesome .. I cant wait

 

[alexlee]

You could read the desperation in Costello's 'voice' when he was quoted in the papers as saying 'with inflation at 2-3% there is no reason for the RBA to raise rates'. I mean, ANYONE who actually shops at a supermarket would see that prices are rising far faster than that.

I noticed China's response to higher food and fuel prices was...... PRICE CONTROL! As if that will work.
Alex

 

[alexlee]

I read a slightly contrary opinion today. It said that rate rises aren't really necessary in this environment, and that by raising rates too much now, the RBA runs the risk of recession next year. This means the RBA will have to cut rates, and if Labour gets in they will run an expansionary fiscal policy. This may mean the AUD falls back.

I'm seriously thinking about buying some US shares, the ones with good dividends which derive income from foreign countries, while the AUD is so high.
Alex

 

[feihong]

I read a slightly contrary opinion today. It said that rate rises aren't really necessary in this environment, and that by raising rates too much now, the RBA runs the risk of recession next year. This means the RBA will have to cut rates, and if Labour gets in they will run an expansionary fiscal policy. This may mean the AUD falls back.

I'm seriously thinking about buying some US shares, the ones with good dividends which derive income from foreign countries, while the AUD is so high.
Alex

Depends on which company. Generally speaking, I wouldn't touch any major financial stocks as they are what dragging the market (Goldman Sach being the exception). Engineering service companies are the real power train, and I can't see them doing badly in medium term at least. Tech stocks are excellent too. Also, go with BRIC ADRs, they'll make you a lot of money in short term, e.g. Brazil's CVRD has outperformed BHP by miles, and PetroChina is fast catching up Exxon Mobil in becoming world's largest company by market capitalisation.

 

[alexlee]

Depends on which company. Generally speaking, I wouldn't touch any major financial stocks as they are what dragging the market (Goldman Sach being the exception). Engineering service companies are the real power train, and I can't see them doing badly in medium term at least. Tech stocks are excellent too. Also, go with BRIC ADRs, they'll make you a lot of money in short term, e.g. Brazil's CVRD has outperformed BHP by miles, and PetroChina is fast catching up Exxon Mobil in becoming world's largest company by market capitalisation.

Goldman the THE one that I won't touch. Think about it: how are they valuing those illiquid things they supposedly made profits on? And who's sitting on the other side of those trades? Will their counterparties actually be able to pay them if they close out the trade? Another question is just because Goldman is valuing THEIR securities in a certain way doesn't mean their counterparties are. In short, if Goldman really made those profits, SOMEONE out there is sitting on a big loss. If anything I'd prefer Merrill or Citi or BoA. Easier to come up from a lower base.

If a recession hits, I wouldn't bet on resource stocks. I was thinking things like P&G and J&J.
Alex

 

[feihong]

Judging by the past performance, you have made more money from your property investments than had you put your money in P&G and J&J They are good mega cap defensive stocks, but I am just wondering whether the rent you are getting now is better than their dividend anyhow? Coca cola, GE and McDonald's are worth thinking about too. Also, Unilever (probably the only 'real' competitor to P&G) has outperformed P&G as well.