Global Inflation

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LongBombFromOutside50 said:
Australia - 5.1% p.a. from the Q1 2022 print
USA - 8.5% p.a. from the Q1 2022 print


Remember kids: Vladimir Putin, not covid hysteria and reckless monetary policy, caused inflation.
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I think Putin played a role, particularly in the spike in food costs which is probably the most damaging part of inflation.

Overall though, reckless monetary policy for the past decade-plus is the main cause, COVID hysteria post vaccines are the cherry on the cake.
 
00Stinger said:
the increase in coast of fuel is the key driver in this, isn't it?
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Short supply chain disruptions (lock-downs and long ramp up times) causing shortages and increased prices. Add to that money printing over the decades (accelerated during COVID) which devalues saving and reduces purchasing power. Then layer in overinflated housing market due to lack of supply and cheap money. Sanctions on Russian oil and gas takes that supply out of the West which is not easily replaced in the short term. Add to that an accelerated phasing out of carbon based fuels (without suitable replacements given current technology) and divestment (gov and private) which compounds the issue. I hope you have your survival kit ready, its going to get a hell of a lot worse.
 
ChampRevesby said:
Short supply chain disruptions (lock-downs and long ramp up times) causing shortages and increased prices. Add to that money printing over the decades (accelerated during COVID) which devalues saving and reduces purchasing power. Then layer in overinflated housing market due to lack of supply and cheap money. Sanctions on Russian oil and gas takes that supply out of the West which is not easily replaced in the short term. Add to that an accelerated phasing out of carbon based fuels (without suitable replacements given current technology) and divestment (gov and private) which compounds the issue. I hope you have your survival kit ready, its going to get a hell of a lot worse.
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All the forecasts im seeing suggest the supply side issues will be mostly gone by early next year. Some will linger but inflation should be significantly lower in 12 months time compared to now.

interest rates are going to get worse though. And in australia a sharp exchange rate depreciation is a very real risk.
 
Seeds said:
All the forecasts im seeing suggest the supply side issues will be mostly gone by early next year. Some will linger but inflation should be significantly lower in 12 months time compared to now.

interest rates are going to get worse though. And in australia a sharp exchange rate depreciation is a very real risk.
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Are you able to walk me through why the Australian currency will get hit assuming our reserve bank keeps up with the US in terms of interest rate rises? We're already in a higher interest rate environment.

Where do you think we'll land in terms of the exchange rate?
 
sabre_ac said:
Are you able to walk me through why the Australian currency will get hit assuming our reserve bank keeps up with the US in terms of interest rate rises? We're already in a higher interest rate environment.

Where do you think we'll land in terms of the exchange rate?
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I don't think the rba can even remotely keep up with the Fed on interest rates. Our housing market won't be able to handle it. It's the rising differential in rates that will drive our currency down. The rates markets are currently expecting for Australia simply will not happen here.
 
Seeds said:
I don't think the rba can even remotely keep up with the Fed on interest rates. Our housing market won't be able to handle it. It's the rising differential in rates that will drive our currency down. The rates markets are currently expecting for Australia simply will not happen here.
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Interesting , I’m of the opinion that the rate differential is more damaging than any housing market cost, time will tell I suppose.


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sabre_ac said:
Interesting , I’m of the opinion that the rate differential is more damaging than any housing market cost, time will tell I suppose.


Sent from my iPhone using Tapatalk
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Its the housing market costs that will force the rate differential to occur is my point. You are right its the rate differential that will cause the exchange rate devaluation. At least initially.

although if our housing market has a lot of defaults then foreign borrowers will become nervous, given our housing boom has been driven by foreign borrowing, and might cause a max exodus of aud. But that wont be the initial driver. The rba will do everything it can to try to prevent that from happening. And thats why our rates wont go up much in the short term.
 
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Some Idiot said:
Latest data shows what we all knew, a good chunk of inflation is driven by businesses adding job keeper payments to their profits rather than paying back what they don't need.

www.theguardian.com

Rising corporate profits major factor in Australia’s escalating inflation, report finds

Wage growth is at record low levels, while the profit share is at a near-record share of GDP, according to analysis from the Australia Institute
www.theguardian.com www.theguardian.com
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that article is garbage.

profits are deflationary because they either get saved or spent on luxury houses and goods (which dont contribute to the inflation rate as they are insignificant in the cpi basket) or they get spent on further capital investment which adds to the capital stock which helps reduce inflation.

And i seriously question chalmers economic credentials based off the comments in that article. real wages are falling but wage spirals dont create rising real wages. They tend to push dowh real wages. Thats why they are such a problem. They create massive endless increases in nominal wages.

in any case no one is saying a wage spiral is a problem yet so i dont even know why we are trying to disprove a wage spiral in the current data. we are concerned it might become a problem. Not that it is a problem already. Inflation currently is being caused by supply side problems and a misallocation of labour due to pandemic lockdowns. These problems should all quickly pass and inflation should be back at normal levels within 12-24 months. Possibly even quicker. Assuming governments dont do something stupid and kick off a wage spiral before that happens.
 
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Seeds said:
that article is garbage.

profits are deflationary because they either get saved or spent on luxury houses and goods (which dont contribute to the inflation rate as they are insignificant in the cpi basket) or they get spent on further capital investment which adds to the capital stock which helps reduce inflation.

And i seriously question chalmers economic credentials based off the comments in that article. real wages are falling but wage spirals dont create rising real wages. They tend to push dowh real wages. Thats why they are such a problem. They create massive endless increases in nominal wages.

in any case no one is saying a wage spiral is a problem yet so i dont even know why we are trying to disprove a wage spiral in the current data. we are concerned it might become a problem. Not that it is a problem already. Inflation currently is being caused by supply side problems and a misallocation of labour due to pandemic lockdowns. These problems should all quickly pass and inflation should be back at normal levels within 12-24 months. Possibly even quicker. Assuming governments dont do something stupid and kick off a wage spiral before that happens.
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The article is beyond garbage. Fodder for the dumbass
Further..

Some countries are worse on inflation, some less. Turkey, Argentina, Venezuela... ( ref above ) Did job keeper profit retention drive their inflation ? Russian inflation has dropped now. Was jobkeper driving them ?

Everything is dumb politics.

Inflation has been driven around the world by many factors, including supply chain disruption, corporate welfare, middle class welfare, and cheap CB money ( note i did NOT say money printing). I saw a well researched ( ie NOT from The Guardian ) report on fintwit recently, if i dig it up will post it. It gave a great decomposition of the sources of global inflation.

edit - forgot Russia and oil, but really, inflation was starting up before Vlad got involved.
 
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sabre_ac said:
I think Putin played a role, particularly in the spike in food costs which is probably the most damaging part of inflation.

Overall though, reckless monetary policy for the past decade-plus is the main cause, COVID hysteria post vaccines are the cherry on the cake.
Click to expand...
Monetary policy isnt the main cause. If it was the inflation would be uniform across the economy. But its primarily been in commodities.

that suggests its primary cause is supply constraints. This has been due to covid restrictions, ukraine/russia war, underinvestment in the energy sector and an excessive amount of droughts.
 
Kanga Commando said:
The article is beyond garbage. Fodder for the dumbass
Further..

Some countries are worse on inflation, some less. Turkey, Argentina, Venezuela... ( ref above ) Did job keeper profit retention drive their inflation ? Russian inflation has dropped now. Was jobkeper driving them ?

Everything is dumb politics.

Inflation has been driven around the world by many factors, including supply chain disruption, corporate welfare, middle class welfare, and cheap CB money ( note i did NOT say money printing). I saw a well researched ( ie NOT from The Guardian ) report on fintwit recently, if i dig it up will post it. It gave a great decomposition of the sources of global inflation.

edit - forgot Russia and oil, but really, inflation was starting up before Vlad got involved.
Click to expand...
This one?

 
Gigantic said:
This one?

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Nah, but thats a good one.

The one I saw was in table form, not chart, and listed a lot of goods & services, and inflows from government benefits and payments, US origin though.

edit - just realised i said "not a good one" - apologies... its very helpful
 
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Some Idiot said:
Latest data shows what we all knew, a good chunk of inflation is driven by businesses adding job keeper payments to their profits rather than paying back what they don't need.

www.theguardian.com

Rising corporate profits major factor in Australia’s escalating inflation, report finds

Wage growth is at record low levels, while the profit share is at a near-record share of GDP, according to analysis from the Australia Institute
www.theguardian.com www.theguardian.com
Click to expand...
Gotta love globalisation! Foreign hands meddle with politics and business to send profits off shore
 
The problem we have is that it's not overall aggregate demand that is driving inflation (especially in Australia), it's sectoral.
Once again we'll let monetary policy do the heavy lifting where fiscal policy should, due to political expediency,
 
Mofra said:
The problem we have is that it's not overall aggregate demand that is driving inflation (especially in Australia), it's sectoral.
Once again we'll let monetary policy do the heavy lifting where fiscal policy should, due to political expediency,
Click to expand...

A little fiscal tightening would help with inflation and assist the budget a bit but nobody is at all interested in that.

It's a shame because in 5 years we'll have another budget emergency.

Oh well.
 
LongBombFromOutside50 said:
Australia - 5.1% p.a. from the Q1 2022 print
USA - 8.5% p.a. from the Q1 2022 print


Remember kids: Vladimir Putin, not covid hysteria and reckless monetary policy, caused inflation.
Click to expand...

Turkey ignored it: As prices soared, Turkey bucked the global trend and didn't raise interest rates. This was the result

Turkey launched an unusual experiment to fight inflation by cutting interest rates. This is how it spectacularly backfired​


While much of the world anxiously waits to see if central banks will keep raising interest rates to combat a post-pandemic surge in inflation, Turkey is bucking the global trend.

The nation's central bank has left rates unchanged at 14 per cent for a seventh month in a row as part of an unorthodox experiment.

Most economists around the world believe that the best way to bring inflation under control is to raise interest rates.

By making the cost of borrowing money higher, central banks are trying to force you to buy less.

While this can trigger slower economic growth and higher unemployment, it can also drive down the costs of goods and services because there's simply less demand to buy them.

But Turkey's President Recep Tayyip Erdogan believes this is a myth. ;)
 

Fed announces another three-quarter-point increase in interest rates​

The move is intended to curb inflation though previous increases this year have had little effect so far

The US central bank is aggressively raising rates at levels unseen since the mid-1990s as it struggles to tamp down soaring prices, which rose by an annual rate of 9.1% in June, the fastest inflation rate since 1981.

The hike raises the Fed’s cost of borrowing to between 2.25% and 2.5% and is the Fed’s fourth rate increase this year. It comes as central banks worldwide seek to calm price rises with higher rates. Fed chair Jerome Powell indicated that there would be more outsized increases ahead if inflation is not brought under control.

www.theguardian.com

Fed announces another three-quarter-point increase in interest rates

The move is intended to curb inflation though previous increases this year have had little effect so far
www.theguardian.com www.theguardian.com
 
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