I look forward to when the RBA admits that imported inflation is dropping quickly.
I fear the RBA is trying to solve a problem that will sort itself out by the same overseas factors that caused it in the first place.
Here are some excerpts from an article in the AFR this morning.
The index that I follow that I think is the best forward looking index of inflation is the US Lumber Index. It has fallen 50% in the last three months.
Just watch inflation plummet when the Vlad situation in Ukraine is resolved.
Maybe then the RBA will stop punishing stretched home buyers who are doing the right thing and trying to form a household and generally along with forming a family, the bedrock of society.
The three signs that inflation has peaked
Michelle Jamrisko
Jun 7, 2022 – 8.48am
Three of the key supply side factors driving today’s global inflation levels have already turned around, meaning relief could be on the horizon for shoppers worldwide.
Though few forecasters are predicting a return to pre-pandemic prices in the short run, global retail giants such as Walmart are now struggling to unload bloated inventory to less enthusiastic shoppers. So a moderation in those supply side pressures could eventually allow central bankers to slow their tightening cycles.
“While inflation in some parts of the world is yet to peak, there are at least some signs emerging that we may not be too far off in terms of a turning point at which we start to see the annual inflation rate start to head lower,” said Khoon Goh, Singapore-based head of Asia research at ANZ Banking Group. Computer chips have halved
A bellwether semiconductor price – a barometer of costs of finished electronics products as diverse as laptops, dishwashers, LED bulbs and medical devices delivered worldwide – is now half its July 2018 peak and down 14 per cent from the middle of last year.
The spot rate for shipping containers – which tells us more about expenses we can expect later in the pipeline for apparel in Chicago, luxury items in Singapore or home furnishings in Europe – has declined 26 per cent since its September 2021 all-time high.
North America’s fertiliser prices – an indicator of where global food inflation is going, including bills for tomatoes in London or onions for sale in a Johannesburg market – is 24 per cent below its record high in March.
With inflation now exceeding 8 per cent in the eurozone, expected to stay above that level in the US when May data comes out on Friday and on the march in Asia too, central bankers around the world are scrambling to contain it. Relief in sight for consumers
But even as central bankers raise rates, more economists are coalescing around the idea that peak inflation is behind us – though there will be a lag before the lower costs of raw materials filter through to the prices shoppers see.
China’s producer prices peaked late last year and are beginning to moderate. Economists are forecasting a 6.5 per cent rise in factory prices in May from a year earlier, down from 8 per cent in April.
Mr Goh said that was a promising development for relief in imported-goods inflation worldwide. In addition, lower container freight rates and improving supplier delivery times in purchasing managers’ indexes pointed to easing bottlenecks that should curb price pressures later this year, he said. Bloomberg
