My crystal ball energy punts for '09: Here in QLD the worst is yet to come in terms of rising energy costs. We may be talking towards the end of the year, but it looks odds on that the consumer electricity tarrifs will spike, perhaps quite dramatically. Also possible is the tarriff for solar energy (where the power co pays the consumer who has a solar installation/inverter) being upped from its present 44 cents net level - making solar more attractive for homeowners and having knock on effects to those companies who manufacture or distribute solar products. Beware brown coal and those who deal in her - there are teeth in the emissions trading 5% deal that some haven't twigged to yet.
That, and don't be surprised if we see significant movement in the most liquid segment of the Australian market - domestic government bonds. My Sri Lankan taxi driver tells me that there may be moves afoot to create a lot more government debt instruments this year.
Anyhoo, that's all speculation and I can't really go into my reasoning there. But some deflationary and some (potentially massively) inflationary forces in the mox.
And thanks everyone else for this thread. One of the better 'inflation vs deflation' ones I've read :) I'll absolutely agree that no-one really knows if we're going to see deflation or inflation, and in what order, and for how long. Something to also consider of course is who benefits most from hyperinflation. If you have a steady job, where wages can be raised in a timely manner, and are drowning in debt, then hyperinflation is your friend - as it decimates the relative worth of your debt. It's worth bearing in mind that this description applies to countries too.
I reckon we may see another percentage point shaved off rates this year, at which point in time a close eye should be paid on China to see if she is going to be deflationary or inflationary. If the latter I'll be fixing rates for as long as I can.
