The visible hand in economics

Inflation breaks the 5% barrier

Posted on: October 21, 2008

Ok, so our pick of 5%pa inflation by September following the Budget was wrong – its even worse at 5.1%. Largest increase since June 1990!

I blame the re-weighting for the difference ๐Ÿ˜‰

Note it will not stay over 5% for long – underlying “true” inflation (stemming from inflation expectations and its impact on the quantity of money) is closer to 3.5%.ย  Although I would like to point out that non-tradable inflation is horrendous at 4.1%pa – horrendous!

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4 Responses to "Inflation breaks the 5% barrier"

iPredict picked it…

“iPredict picked itโ€ฆ”

I saw that – good stuff iPredicit. Although I don’t think iPredicit would have been picking this level of inflation at Budget time (May) ๐Ÿ˜›

It staggers me that the govt subsidies for healthcare and early childhood education (which have now dropped out of the annual rate) had more impact on non-tradable inflation than 300-odd points of rate hikes. On the other hand, maybe that’s the solution to our inflation problem – subsidies for all!

“On the other hand, maybe thatโ€™s the solution to our inflation problem – subsidies for all!”

๐Ÿ˜›

I fear thats the sort of madness that politicians might actually believe – wash your mouth out ๐Ÿ˜‰

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