What Do You Think The REAL Inflation Rate Is?

We all know the Government and the RBA are in cahoots to keep interest rates as low as possible.

This is because any increase in interest rates would have serious, far reaching consequences such as:

a) significantly increasing the government's loan interest bill due to our enormous govt debt. This in turn significantly reduces the govt's ability to fund services and social security payments
b) significantly increasing many people's home and investment loan interest payments so sending many borrowers to the wall or at least forcing significant cuts to consumer expenditure
c) sending the economy into a deep recession or long lasting depression for which our government and the RBA are not equipped to handle
d) a resulting property crash so damaging everyone's wealth and possibly making our banks insolvent

Yes my friends the RBA via these ridiculously low interest rates have placed themselves into a corner with no way out.

Hence they also "manipulate" the inflation rate to justify these ongoing low interest rates because if inflation was "reported" as going significantly higher, then the RBA would have to take action by increasing interest rates.

RECENT EVIDENCE OF INFLATION OUT OF CONTROL….
The price of fuel alone has gone up 100%. (which affects the price of everything)
Cheese up 18% in 12 months and 30% since just before COVID-19. Milk the same and more!.
Meat and seafood is skyrocketing every week right before our eyes…packets of home brand meat pies have increased by 33% this last year alone and they contain less than 30% meat.
Then there are all the packet size shrinkages not even taken into account in the inflation figure (deliberately)
If you eat out regularly you know that restaurant prices have increased 33% this year alone.
And any construction manager will tell you building material prices are going through the roof - if you can even get supplies.
Shipping container costs are up 700%. Yes that's correct!
And don't even get me started on skyrocketing property prices.
Now we have lots of people going on strike every week because they can see their pay packets buying less and less every week. And plenty of businesses are finding it difficult to attract workers so having to offer higher wages to get employees back.
How much more will all this add to inflation in 2022?
Yet our Reserve bank tries to tell us that inflation is still under 3%.
They must think people are stupid.

So my fellow and highly informed OBs how much do you think is the REAL rate of inflation?
Please indicate in the poll.

Also feel free to add your own observations of rapidly increasing prices in the comments

Poll Options expired

  • 63
    3%
  • 16
    5%
  • 43
    7%
  • 238
    10%
  • 65
    15%
  • 112
    20%

Comments

        • NEVER renew your insurance. Even if you recontract with the same company, it will be cheaper.

          Also you don't have to wait until renewal, you can cancel your car insurance and get a pro rata refund

          • @Shacktool: yeah I've always done this. Hasn't dropped at all

  • significantly increasing the government's loan interest bill due to our enormous govt debt. This in turn significantly reduces the govt's ability to fund services and social security payments.

    The federal government can always fund these payments regardless of the size of the government debt. The main issue is making sure there are things available to purchase when the payments are made.

  • +1

    Home brand UHT milk and facial tissues have increased 25-35% over the past 2-3 years. So i would say inflation is ~10% PA.

  • +1

    If you work out your own expenses and look over the last 12 months, they always go up more than inflation. The inflation rate also helps employers not give high pay rises. We are becoming like America where large numbers of people have 2 jobs to keep up.

    • We are becoming like America where large numbers of people have 2 jobs to keep up.

      Or people can spend less on widgets, trinkets and soft things. Buy assets that give yield instead of junk that will end up in the bin.

      • +2

        How people spend their money is one thing. Having less to spend is something else.

        • -3

          Why do people need 2 jobs if their spending isn't an issue?

          • +2

            @rektrading: … because they are not paid a ‘living wage’.

            • @Eeples: What is the living wage in Australia? Is it below or above the median income?

              The latest ATO tax statistics revealed that in 2017-18 the median taxable income for Australians was just $45,882 – and for women specifically it was a mere $39,058:

              Greg Jericho Tue 21 Jul 2020 03.30 AEST
              https://www.theguardian.com/business/grogonomics/2020/jul/21...

              .

              Australians on a salary of more than $62,000 a year are in the top half of income earners regardless of whether they work full or part time (pictured is Melbourne's Bourke Street Mall)

              The mid-point of male earners, regardless of their hours, was $71,760, with their pay increasing by 6.2 per cent. This rose to $80,132 if they worked full-time.

              For women, $52,936 was the mid-point with pay rising by 1.8 per cent. For those putting in full-time hours, the median pay was $71,760.

              By STEPHEN JOHNSON, ECONOMICS REPORTER FOR DAILY MAIL AUSTRALIA
              PUBLISHED: 16:03 AEDT, 15 December 2021 | UPDATED: 17:29 AEDT, 15 December 2021
              https://www.dailymail.co.uk/news/article-10311107/Australian...

              The median income has gone up +26% (based on the data from the articles) between 2017/18 and 2020/21. That is a nice bump in income.

    • American companies rise the cost of their goods while posting bumper profits

      something doesnt seem right there… .

  • CPI as calculated by the RBA does not include housing and rents.
    The official CPI also includes "holidays" and we're not allowed to go overseas or interstate with COVID for the last 2 years

    • +1

      Allow me to address your misunderstanding.

      1. CPI is calculated by the ABS (Australian Bureau of Statistics). The RBA has nothing to do with this.
        The RBA does, however, take into account the inflation rate published by the ABS in deciding its monetary policy.

      2. CPI does include rents. It also includes prices of newly built properties.
        The glaring omissions though are prices of established houses and mortgage payment. Mortgage payment was removed from the CPI in 1988.

      Please visit the ABS's website and read their latest report on inflation (for the quarter ending September, 2021). Link's at the bottom.
      If you're genuinely interested, you'll learn a lot there, definitely a great deal more than from some random opinions tossed around by arm-chair economists on this forum.

      https://www.abs.gov.au/statistics/economy/price-indexes-and-...

      • Actually the RBA mandated what was included in the CPI. Although they didn't calculate it they definitely influenced it and then ABS just collects and calculated in accordance to that mandate - https://www.rba.gov.au/calculator/

        • +1

          My friend, it appears you have a serious misinterpretation of how the CPI is constructed, which would be detrimental to your understanding of inflation and other economic indicators. Allow me to elaborate.

          1. The RBA does NOT mandate what to be included in the CPI.
            The RBA does embrace the so-called "inflation targeting mandate", starting 1992/1993.
            Under this mandate, the RBA's top priority is to ensure a low, stable inflation rate, within a targeted range of 2 - 3%.
            Should there be signs of inflation potentially rising above this range, the RBA must respond with contractionary monetary policy to calm things down.
            This was exactly what happened when inflation climbed to 3.1% in June, 2010 due to the mining boom.
            Historically, policy makers didn't pay much attention to inflation; they focused solely on unemployment instead.
            However, spells of high inflation during the 1970s & 80s and its extensive economic damages opened their eyes, hence, the embrace of "inflation targeting".

          2. There was one occasion when the RBA did exert influence on the construction of the basket of goods used to calculate CPI.
            It was in June 1998.
            Prior to June 1998, the primary purpose of the ABS's inflation rate is to help with wages indexation under a centralised wage setting process.
            We have long moved on from that, replacing it with private Enterprise Bargaining Agreement.
            Back then, the RBA complained that the inflation rate, as calculated by the ABS, made it difficult for them to conduct on monetary policy.
            This was because the CPI included mortgage payment and interest charges on consumption of durable goods.
            The RBA argued as follows. If the RBA raised the cash rate, and by extension, interest rates; mortgage payment and other interest charges would rise, pushing the CPI and inflation up. This would distort the impact of a tight monetary policy on general price level.
            So major changes were made for the CPI in June 1998.
            The most noteworthy one was removing mortgage and other interest payments from the CPI, while adding prices of newly established dwellings.
            Above was the only occasion in which changes were made to the CPI in order to aid the RBA and its monetary policy.
            This is well documented both from the RBA and the ABS's websites. See links below:
            https://www.rba.gov.au/publications/bulletin/1998/oct/1.html
            https://www.abs.gov.au/websitedbs/d3310114.nsf/home/consumer...
            Apart from that, the ABS has been maintaining its independence and integrity in computing inflation and other indicators all along.
            The basket of goods used to calculate CPI is to be reviewed every 6 years to include new products and remove outdated ones.
            The most recent update was in 2015/16; and the basket was supposed to be updated this financial year (2021/22). But it seems to have been delayed due to COVID causing difficulties on data collection.

          Overall, speculating that the RBA would somehow pull strings on the ABS to serve their mandate?
          That's a cynical, baseless accusation.

          • @motui302: Ok well thanks for that. That was helpful! Perhaps then influenced would be the better word but even then it seems the RBA doesn't truely influence the CPI rather only which figures they choose to use to make interest rate decisions (Referring to a recent RBA meeting where they decided hours worked as better indicator than unemployment rate, or how they decided to use core inflation figure rather than using CPI). Either-way its going to be a interesting year ahead of us for 2022.

            • +1

              @postform: Glad it helped.
              Regarding the two other points you've just brought up.

              1. "Monthly hours worked" is a far better metric than unemployment rate.
                The unemployment rate, if left alone, is such a flawed and misleading indicator.
                Recall what happened in April 2020 when Australia first plunged into lockdown due to COVID.
                Unemployment rate in April 20 was reported at 6.2%, increasing by only 1 percentage point compared to March 20 when there was no lockdown.
                The ABS got laughed at, and people started tossing around accusations of numbers being manipulated.
                However, the ABS did report other indicators to complement the unemployment rate. One of which was "monthly hours worked", which fell by 1,626 million hours. The previous record fall was only 36 million hours back in 2007.
                You can read more here:
                https://www.abc.net.au/news/2020-05-14/coronavirus-australia...
                Unemployment rate was such a flawed metric when left alone due to how it is calculated.
                The ABS has no fault though, it was simply following the international standards.
                The most glaring problem with the unemployment rate is: If you lose your job and decide to give up looking for work, you won't be counted as unemployed, but rather "not in the labour force". Thus, you won't be included in the unemployment rate.
                Back in April 2020, close to 500,000 people lost their jobs and didn't bother seeking new work because of the lockdown. These people were excluded from the unemployment rate, which explains why the official rate was so low.

              2. Core inflation figure (also known as underlying inflation, trimmed-mean inflation, or weighted median inflation) is indeed better than headline inflation. This is because it removes wild, one-off movements in prices of certain goods.
                An example for you.
                In June 2020, headline inflation rate for the quarter was -1.9%. Many lost their mind, fearing deflation.
                But this extreme figure was singlehandedly caused by childcare made free and large falls in petrol price (remember oil price went negative in April 2020?).
                Removing these extreme movements, core inflation for June 2020 actually increased by 0.1%.
                You can read more here:
                https://www.abc.net.au/news/2020-07-29/inflation-cpi-abs-jun...
                So the RBA focusing on core inflation instead of headline inflation is a good choice since it helps filter out the noise.

              • @motui302: I agree on those two points. Collection data points is useless without context.

                In saying that let's see how 2022 unfolds. As someone in this forum pointed out our metrics are always 3 months behind and yet we make policy decisions on old data where as the USA who collect data points every month lowering the lag (Although the feds definitely decided on what's included in their "trim" inflation — very dodgy since now they are all balls to the wall trying to tackle inflation after the re-election of the fed chairman).

                I think inflation is much much higher than what it officially reported - mainly cause its behind by 3 months. To a lesser extend (which can not be proved unless someone decides to leak emails) corruption due to election timings. — but this is my personal opinion.

                This forum has been educational for me but at the same also opens my eyes (even though this forum is anecdotal evidence) that I am not the only one experiencing higher living costs, when nothings changed in terms of my living standards. In fact I would say I've reduced going out, eating out, buying things. And yet my base line costs has gone up (Mostly from food, petrol, subscription increases, and general increases in regular consumables - also on the bigger purchase of recent all of them have gone up compared to 1 / 2 years ago where it would be roughly 25-30% cheaper)

  • +1

    Is this why ppl invest in cryptocurrency?

    • -1

      No. If you just want to hedge against inflation you'd just buy say Woolworths / Coles shares, they make a margin regardless you get paid dividends and capital appreciation. Crypto is get rich quick, because you don't get dividends (DeFi is not dividends, it is lending out crypto to traders so they can short) just capital appreciate (if it goes up).

  • I can see it in my weekly grocery shop, it's insane.

  • Tbh, I don’t know. However cost of housing is a lot higher and i can definitely confirm that money doesn’t go as far as it used to in terms of essentials like groceries and bills. This compared to just pre covid

  • where can I buy your tinfoil hat?

  • +3

    REAL inflation is as individualized as per your personnel consumption. Differs to each person. To find out what it is, you'll need to track your own basket of goods.

    • That is true. But what would you say if my lifestyle hasn't changed but my bills have increase about 35% (I do expensive budget tracking) - I understand 5-10% deviations could be noise but 35% definitely tells me things are getting more expensive.

  • +1

    About 15% would be right.

    Many earn over 150K and they have secure jobs so they can splurge on useless stuff.

    Just look at Canberra and Melbourne

    I feel like us Sydney people are a poorer lot

    • I'm on about that salary ish.. I still can't splurge on useless stuff.. I am not even able to afford a home where I would like (Its not the richest suburbs in fact is a lower than average suburb) unless I got woop woop. However I understand and appreciate that those less fortunate than me aren't even able to buy in woop woop. Either way my point is.. even on my salary I don't have the opportunities that people in my position would have 2 , 3 or 5 years ago!

      • +1

        Then you’ll need a partner earning around the same and then you can afford that house.

        • unfortunately I dont have a partner. Its funny how we cant do it ourselves anymore.

      • My father growing up in an unskilled job (Government job as did everyone in those days), had 2 blocks of land and a house on one to lock up stage and a new car by 21 years of age all owned outright.

        Albeit late 1950's early 60"s.

  • +1

    ( Price of Iphone this year / price of iphone last year ) - 1 = Current inflation

  • Building materials have more than doubled according to my construction friends, cooking oil have nearly doubled, cost of seafood and meat have increased by more than 30% according to my restaurant friends, cost of every day item have gone up by atleast 20% according to my girl friend who does weekly shopping.

    Fuel price price have gone up to 60% at one point and roughly 50% right now according to my own experience.

  • Not the consumer price but the Chemical Engineering index for building a new process plant. It's all gone up!

    "The current CEPCI value now sits at 21.7% higher than the corresponding value from October 2020. "

    https://www.chemengonline.com/pci-home

  • Shit gets more expensive every year.

    Accept it.

  • -1

    About 3%. I don't think the RBA are pulling these figures from nowhere.

    For things that we spend the most on - groceries, insurances, electricity, clothes etc.. Prices have hardly gone through the roof. Transport it has - but only to a normal level pre pandemic.

  • +1

    We'll find out the truth after the election I reckon.

  • +17

    There are numerous basic mistakes, reflective of fundamental misunderstanding in the opening post. Allow me to elaborate.

    1. Rising interest rates does NOT increase the government's interest payment burden. If you have some basic knowledge on how bonds work, you would have known that bonds pay a quarterly coupon rate, pre-determined when the bonds were issued.
      Rising interest rates only impacts the government's ability to raise new funds through issuing new bonds. The government will have to accept a steeper discount when selling their new bonds in times of higher interest rates.
      The effect on interest payment for existing government bonds? Zero!

    2. The latest data point for inflation is 3% (headline inflation rate), with underlying inflation rate sitting at 2.1%. However, there is a catch.
      These data are for the quarter ending September, 2021, not in real time.
      Inflation data for the quarter ending December, 2021 will be released on 25th January 2022 (about 2 week's time).
      It will give us a clear picture on how prices have changed in the past 3 months.
      Of course, we should expect something significantly higher than 3%, considering all the recent supply chain disruptions.
      Something worth complaining about is how infrequent the ABS reports inflation data. The USA does it monthly. Our current practice, which is quarterly, fail to catch up with the fast-changing, uncertain economic landscape as presently witnessed.

    3. Price of fuel has NOT gone up by 100%. You can't pick the price back in April 20, compare it against the current price, then yell: "Hey, fuel price has surged 100%".
      This is not how we calculate inflation, or in fact any thing.
      If you're after annualised inflation, you'll compare the price during the current period versus one year prior.
      Fuel price for the quarter ending September 21 was 153.85 cents/litre on average (for 91 Unleaded). The year before (September 20), it was 123.34, thus, there was a rise by 25%. Very steep, but no where near 100% as OP claimed.

    Due to the ABS's attempt to include the prices of all goods & services in their calculation (they collect 900,000 price data points every quarter), it is true that the inflation rate, as reported, does not fully capture each individual's experience with cost of living. This is a well-known problem.
    For example, the price of essential goods & services like fuel, utilities, health care have risen very rapidly, only to be dragged back by minimal increases (and in many cases decreases) in the price of clothing, computers, etc.

    It must feel frustrating, seeing your cost of living rising rapidly. I feel the same too.
    But tossing unfounded accusations that the ABS is manipulating the data to enable the RBA & the government to pursue some hidden, nasty agenda?
    IMO, that's highly disingenuous, and downright dumb.

    You can take this opportunity to become more literate on economic data and principles.
    Else, feel free to stick to the status quo. That is, making some rants, then seeking confirmation bias.
    All the best.

    • -1

      its nice to read a post by someone whos not a retard like OP

  • +1

    The reserve bank doesn't measure inflation, the ABS does.
    Also the latest data only goes until September last year.

    If you were serious about actually complaining about it, have a look at
    https://www.abs.gov.au/statistics/economy/price-indexes-and-...

    And not just the headline figure, you can go look the methodology and the data and make actually pointed criticisms. Remember that these are for consumers though, not business.

    For a good example that backs up what you see, Fuel is 23.6% higher than it was 12 months ago in Melbourne, 8.5% higher than 24 months ago though.

    People are very bad at actually noticing real pricing, you see something go up by 10% and think it's huge, but forget that it's only a small fraction of your spending.

  • Well there is on average 1.5%, so I guess I'll go for 3%.

    CPI is about 3% for this year, so I'm going to say it's probably 3% inflation over last year.
    However 2 years back is was 1.6%, and last year it was ~0% or maybe negative (Petrol was under a dollar, stupid amount of variance there!).
    So on average it's 1.5% but the last two years have messed with it.

  • +2

    This thread is why financial literacy should be a subject at school

  • OP fails on his first point, (a) when he claims that a rise in rates would increase servicing costs of existing government debt. No point reading the rest.

  • Public transport unions will always complain, I know anyone who will take their job and work for free, yet most complain.

    Unions are not bad, but they forget it's about job security not constant payrises, plus I'm sure the people here are not asking for payrises right because your all decent people.

  • I voted for 5% and seeing as it's the lowest voted, I feel like I have to justify myself, the only way I know how - cold, hard stats:

    Cost of living I'll estimate to be roughly:
    ~30% "Markets" (Milk, food, groceries etc.)
    ~30% "Rent/Mortgage"
    ~15% "Restaraunts"
    ~10% "Transport" (Fuel, Car, Bus etc)
    ~5% "Utilities (Water, Electricity, Internet, Phone etc.)
    ~5% "Sport/Leisure)
    Source: https://www.numbeo.com/cost-of-living/country_result.jsp?cou...
    Of course, you are a special, individual little snowflake, and YMMV.

    Tracking "Markets" and "Rent/Mortgage" historically..
    It indicates inflation for the last 10 years (excluding 2021) as follows:
    2020 2.1%
    2019 5.1%
    2018 0.8%
    2017 -1.1%
    2016 -3.8%
    2015 5.3%
    2014 -1.5%
    2013 -0.7%
    2012 3.6%
    2011 10.9%

    I know.. it feels low, and I do think 2021 will be another 5+ percenter, but on average, it's actually still below 5%

  • +1

    Increase in interest rates can be good as well

  • +1

    In line with Luffys bounty increase 😃

  • Some items in my food business have barely changed, but others have increased nearly 100%. Overall, I'd say on average the weekly purchasing cost has increased in total by 15-20% YoY, which is by far the largest I've ever seen in my lifetime.

    Some items you can cut back on, but other items, ie. cooking oil, is essential and affects the cost of every other item. It sure has been a wild 2 years, we went from recession to huge inflation in such a short time. The funny thing is, for my business, during the recession we saw record takings and growth. Now it's obvious things are catching up.

  • +2

    I don’t entirely agree with the sensationalism in “govt bad: low interest bad”. It’s quite obvious in most spending categories from cars to food that inflation has resulted from supply shortages and supply chain disruptions.
    To counter OPs argument, hypothetically, raising interest rates to 10% will make zero difference to how much fuel I’ll need to buy for my commute to perform essential work nor how much fuel will be used to deliver cheese to my local supermarket i.e. it won’t have improved the value of $ for some (most?) essential items.

    • +1

      You're absolutely correct.

  • All I know is, the last year I’ve been working full time salary around $60k, and my purchasing power is rubbish haha. It’s really hard to make my money last till the next pay day. I have the cheapest electricity company, internet is at the moment free, mobile Amaysim, public transport mostly, have a balance transferred CC so I cut the interest and making repayments, take my lunch most days, and try to only buy what’s reduced and on special at the supermarket, close to no takeout. If I wasn’t receiving Family Tax Benefit I’d be absolutely stuffed

    • U renting? How much?

      • $460 p/w. Dead money :(

        • Practically wise, why is your rent so high for someone earning at that salary?

          • +1

            @pogichinoy: That’s actually like $120 under the going market rate in my area, it’s pretty ridiculous

            • @SirMurduck: Sorry, I mean, why are you renting at that price considering your salary?

              Is shared housing an option?

              Maybe my mate is practical, but he's paying $210 a week and supposedly that's 18% of his take home pay.

  • +3

    The RBA has a poor track record when it comes to ethics. No surprises here.

  • The real rate if inflation is the amount by which housing is increasing each year. In a average year it's about 10%, last year was double. The government lies about inflation just like it lies about everything else. The government is the enemy. All our despicable government cares about is jacking up housing prices to enrich the "top end of town" (the people who own property, which includes all politicians).

    Remember when the government said we would have herd immunity and life would go back to normal when 80% were vaccinated? People are triple vaccinated and corona hasn't gone away. Just more government lies. Ballot papers should have a "None of the Above" option, because no-one is worth voting for. We just have a uniparty whose policies are a) maximize property prices, b) maximize immigration.

    • The real rate if inflation is the amount by which housing is increasing each year.

      Nope. If you use housing then it is either amount rent is increasing or your mortgage payments are increasing. Just because capital values went up 20% you don't pay up front, you pay it via repayments of P&I.

      If you're repayments are 50% of your take home pay then a 20% increase in repayments will only need 10% increase in pay to cover.

      If I told my manager that Woolworths $1 facial tissue has gone up 30% and use that to negotiate my pay rise they would look at me like I'm not all there.

  • +1

    People are somehow much more wealthy, the money keeps pouring out like champagne.

    Rising rampant inflation is really bad, the rich elite lot are making life difficult for the battlers.

    Score one for rabid capitalism

  • +2

    Economics really isn't a guessing game, this idea that inflation is internationally underreported has been pedalled for years and usually comes from people focusing on select items or not understanding economics at all, followed by some weird financial conspiracies.

    People are confusing wage adjusted cost of living with inflation.
    Inflation is related to the change in price in money itself, not specific items in the economy. If a range of items increase in price, the price of money hasn't necessarily gone down because it was not caused by the value of money, it was likely caused by market practices (like a supply chain crunch couples with immense consumer savings and huge economic recovery we are seeing globally right now). Inflation is best approximated by the CPI because inflation affects everything, not what you in particular spend on your cost of living. There isn't a better measure, people just want a different statistic entirely.

    Now this whole pending collapse idea… You can literally look at 10-year breakeven inflation rates for the TIPS spread. There is regular government debt and inflation protected government debt, it tells you what the market expects of long-term inflation estimates. If you predict inflation is indeed wrong, you can make a loooot of money by playing around with this debt. The TIPS market reacts instantly to changes in variables than affect real inflation, and the actual financial institutions who are buying government debt are not at all concerned with inflation or some weird idea than the RBA has colossally (profanity) up, when it reality they can easily raise interest rates whenever they like without your 4 scenarios occuring. That doesn't happen when interest rates are raised in a controlled manner, right now the benefits of ballooning the economy is greater than mild inflation.

    The RBA is doing the same thing as every other Central Bank, low interest rates during a recession/recovery before planned rate hikes. It's not some weird shortfall, the nerds that run Central Banks in advanced economies are VERY competent at these exact situations as seen in 2008.

    • Good point.

      The bond markets are a massive voting machine. Markets are usually more right then wrong. Yes, do get screw ups like 2009/10 but then it comes around once every 9 years and over the last 30 years the share market is nothing but up.

      Probably guaranteed the people who are complaining about some inflation conspiracy are those who don't have relevant degree or relevant experience in the field and read some opinion piece with selective facts and then keep parroting it.

  • -2

    lol, love inflation truthers, you guys are great

  • Anyone who breezily states that the ‘government and RBA are in cahoots' has lost me immediately. Although it may fit with a cosy conspiracy theory, it is not how our economy works.
    Apparently, a tin foil hat discourages both the gov’ment and RBA from finding out what we really think about inflation.

  • I’m not keen on talking up inflation as business will use that to justify not increasing wages when in fact wages ought to be going up because of labour shortages.

  • Rents in Sydney are starting sky rocket.. :/

  • +1

    Roy morgan asks a few thousand people this question every month…
    https://www.roymorgan.com/findings/8791-australian-inflation...

  • +7

    Surprised to see many defending the RBA , ABS and the CPI calculation. The biases in the calculation are out of touch with reality.
    The main categories that the standard Australian spends the most on each week and care most about wrt to inflation are:
    1. Rent
    2. Groceries
    3. Energy
    4. Telecommunications
    5. Transport

    All of these categories have seen far greater than 2-3% inflation over the last year. Reading a figure of 2-3% is like a big spit in the face.

    The RBA and ABS may not be colluding, however the ABS's funding is dictated by the treasury. The RBA, although many claim to be fully independent, act on the remit of legislation which is controlled by the government. If the RBA/ABS start truly acting noble and independent, a majority government has full power to make changes or interfere with either agency.

    Why do governments like hot inflation? How does inflation benefit the government? It devalues government debt, lowers interest repayments and allows governments to continue to grow. It is a hidden tax.

    How does inflation hurt the average Australian? It is a hidden non-progressive tax that increases wealth inequality. Keep it consistently high long enough and there won't be much of a middle class left at the end of it.

    Note: I am talking about suppression of hot inflation say 7-15%. Hyperinflation benefits no one other than anarchists as it will result in society pretty much crumbling.

    • Energy, telecommunications and rent have all decreased over the past 12 months (well, rent in the major cities of Sydney and Melbourne, since the CPI is an average then these cities significantly affect the average). transport has 'decreased' in the sense that people are spending less money on transport and petrol, while up, is only barely above 2014 prices.

      So what is your point?

      • Electricity I'd say have come down. Gas is up.

        Rent is down in inner suburbs but on the whole up. I'd suspect the rammed up house prices will have to feed into rents which will feed into salaries which is a vicious cycle.

        Transport has decreased only because most people have opted for more efficient cars and travelled less. I can't see fuel staying stable as less money spent on exploration and extraction given the 2050 net zero targets.

      • +3

        My point is the advertised 2% CPI is not what is felt in a standard Australian's wallet over the past year.

        Transport is up - used cars are up ~10-20%, petrol is up ~10-20%, new cars are up ~10-20%.

        Energy is also up look at coal and natural gas prices over the last year.

        Rentals for the average Australian family have gone up significantly. Rents may have fallen in some dense areas but that is due to non existent immigration and international students that usually make up a big chunk of these rental markets, these will return to normal or possible higher when we start allowing people back in. Suburban and regional rents are at all time highs right now.

      • There are more and more toll roads and prices of tolls only go one way.

    • +1

      Why do governments like hot inflation?

      … It is a hidden tax.

      The real revelation from me was in one of Ray Dalio's books where he explained how inflation is a transfer of wealth from private hands to the government.

      If we earn a 9% on our investments, but inflation is at 8%, we're paying tax on the entire 9% return even though our purchasing power is barely keeping up with inflation.

  • Peter Schiff & Lewis Howes on fiat money and how the feds are destroying it.
    https://www.youtube.com/watch?v=4AV0gaIhehQ&t=3663s

    • They've been saying this for ages. If you look at USD to AUD, JPY and GBP it has remained relatively stable.

      If you want to peddle and asset as a store of value and will go up you obviously talk down the comparison.

      • If you look at USD to AUD, JPY and GBP it has remained relatively stable.

        All fiat money is going down to the right.

        It's coded in history.

        • If I want to sell you a bridge I'd be talking down ferries and tunnels.

          • @netjock: There are no bridges, ferries or tunnels here.

            There are only numbers with no biases.
            https://files.ozbargain.com.au/upload/393946/90998/screensho...

            • +1

              @rektrading: I tell you what the lie is.

              You only show inflation.

              You don't show wage inflation. The average salary wasn't like $60k in 1923. You also forget about quality of life. There wasn't medicare.

              • @netjock: I like to learn more. Could you please tell me where I can find the charts for those things?

              • @netjock: Here is talking about inflation, not wage inflation. please keep yourself in track.

                • @luckyang: Someone is jilted.

                  You can't say $100 in 1929 is worth x% less in 2022 without putting it against the fact you are not getting paid same $5 a month in 2022 as 1929.

                  Trying to present one side of the equation to win and argument.

                  Everyone should go into salary negotiation presenting the fact that Aldi facial tissues have gone from 95c to $1.29 but let's pretend the price of big screen TVs aren't coming down.

  • I reckon maccas is a good reflection of purchasing power (not inflation I know)

    As some posters have stated.

    Costs go up and quality / size goes down and it is all an illusion.

    You can't print hundreds of billions of dollars and have banks magic up loans from thin air and not experience inflation in certain areas.

  • Easily 10%+
    My oats from Aldi has risen 50%

  • This is the problem when you're half educated (but think you are fully educated) with a penchant for conspiracy theories.

  • +1

    It's pretty easy to tell what the real inflation is. Just goes to Woolies or Coles and grab a basket, buy 15 essential groceries items that you used frequently and compared the total cost to last year and from there you can find the real inflation rate.

  • +1

    Omg. This is why people should study Economics….

    So many assumptions wrong by OP. Just to listed a few.

    • Government has no direct involvement is offical interest rate, although low interest has a short term benefit to policy makers
    • While RBA decides the movement of Interest rate, controlling inflation is only one of their consideration. It is a basket of driving forces. And these day the main one is the super low US rates. IF we hike rate to 3% when US stays at 0.1%, this create a window for trader and people who can borrow short term (over night) money in billions from US to deposit in AUS banking system for the easy profit. This will push AUD, stock market up, increase Inflation. What is worse is when these easy money leave the country in large amount in short period of time, it will reverse above and creates a disaster. (If you are too young please go find out what happens in 1997 Asian Financial Crisis? )
    • Inflation is based on CPI (Consumer price index) and it is a Science of Statistics. Try to understand how the measurement is taken FIRST before criticizing it. You dont have like the measurement, but disagreeing it is like you disagree on the measurement on your ruler and you insist on measuring with your arms.

    Last word to OP. Google Turkey and Inflation and check what disaster can really happen when a policy maker can actually dictates high interest rate against market.

  • Buddy, price hikes for most of the things you pointed out such as fuel, materials are due to shortages and shipping constraints. I think they're temporary and won't remain at these inflated prices.

  • -1

    conspiracy, government manipulation, elites, RBA in cahoots with government blah blah are first world problem, too much free time on the internet, these guys need to live in a third world country in crisis to see how good they got in a country like Australia.

    all the opportunities are here, you just have work hard and earn it and stop blaming XYZ.

    government here is hell bound to help you and the economy when you have it rough and hit a skid
    people in my home country said WTF is job keeper? they don't believe it exist in their world, it not possible the government can be that generous.

    in my home country you either work or you die of starvation, no centrelink, no medicare and when you hit a skid in life you are on your own, so you learn from a young age to work hard, invest wisely and save for rainy days and don't rely on anyone to help you and you don't blame anyone for your problems.

    • -1

      all the opportunities are here, you just have work hard and earn it and stop blaming XYZ.

      Nice straw man.
      OP is saying inflation is higher than what the officially reported figure (which the poll indicates, most of us agree with).
      Nobody is saying we lack opportunities or would be better off in third world countries.

      • First line said otherwise that stuff comes out of conspiracy 101 book

        “We all know the Government and the RBA are in cahoots to keep interest rates as low as possible”

      • OP is saying inflation is higher than what the officially reported figure (which the poll indicates, most of us agree with).

        Which is the very definition of a conspiracy statement. The official figure is manipulated or whatever so that …. what? interest rates are lower than they would be otherwise (which for many people is a good thing). Who knows.

        If you consider that the CPI basket is not appropriately made up or weighted then argue that. If you consider that the CPI is not appropriate for certain situations or uses (which it isnt and the ABS is very open about it) then say that. But to say 'the officially reported figures are incorrect' is plain old basic conspiracy thinking.

  • Share it with your family, friends and join in the fun.
    https://twitter.com/thecryptoc0up1e/status/14788589915435048...

    Let's go, Fiatdolla!!!!

  • RATs are going up every.minute

  • +1

    Assets reflect the real rate of inflation as people move their depreciating cash into stores of value.

    Stock/housing markets are up 20-25%, so that is the real inflation rate currently.

  • Just buy and hodl bitcoin 🤪

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