CPI & Inflation

G day Greg Hearn Financial Physicist down here at Bar Beach it’s Friday coffee in hand surf is pumping out there it’s actually probably just about the first day this week it’s been surfable although there’s been a few people out and the wind’s a bit lower today which is always good uh but too big for me so I’m way too old for that stuff in fact I realized this morning I haven’t actually been for surf this winter so uh I might have to get out there later on over the weekend anyway I want to talk really quickly today about uh CPI and inflation and where we’re at and what that’s going to do for interest rates our favorite topic of course um you would have seen this week the CPI number came out at 3.8% but the economists are saying not the Reserve Bank the economists are saying we’re not worried about that because the underlying inflation went down so apparently we have two inflation figures now we’ve got CPI and that crash an annual inflation figure which is the 3.8% but they’re now they’re measuring an un an underlying inflation which is the core now that says me the Reserve Bank uh uh cooking the books a bit like the government did many years ago when we had the recession in the Rudd years uh where they manipulated and I’ll give you a back story in a minute they manipulated the data to not record an recession um it seems to me the Reserve Bank are now looking at measures that we can’t see we can only reflect now okay as individuals we don’t we we we contribute but we can’t massively affect the outcome of inflation clearly um so the good news is if if what the economists are now saying is we it’s more unlikely even though my last uh blog said what we should be doing um it is more unlikely that we won’t go an interest rate rise in August which by the way it’s now the second of August so they meet Monday and Tuesday next week so be an update later but uh if the underly inflation is not as hot as the CPI then that’s good we’ll have at least a static interest rate next month so hopefully back back to those um uh Rudd year recession which wasn’t a recession so my neighbor was part of the ABS at that stage and he was part of that team that did the reporting they manipulated the money the the numbers so it was recorded a .01% increase in GDP rather than a negative number so therefore there was there was no recession officially no recession at that time it was a technical recession which is what we read now but this government this is how they do it and Economist this is how it’s all done it’s all smoke and mirrors so bottom line CPI has not been quite as hot as apparently the RBA were thinking hopefully we dont get a rate rise anyway thats it for me peace out bye