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 "Fact: Consumer spending levels have dropped since the beginning of 2005. The question is "why?". The interest rate rise of .25% had some influence, but shouldn't have had such a significant impact. This article attempts to make some sense of the current market so that we can have an idea of what the future holds" - Mark |
| Consumers expecting inflation |
| By Henry Thornton |
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July 15, 2005 The Melbourne Institute Consumer price expectations survey, released yesterday, shows that consumers expect prices to rise in the next year. From The Oz, "About 20 per cent of survey respondents expected inflation to be within the Reserve Bank's comfort zone of 2 to 3 per cent, down from 24 per cent the previous month. Fewer people expect prices to fall or remain the same." "The Melbourne Institute said the rise in inflationary expectations followed mixed evidence about the state of the Australian economy in recent weeks." Mixed evidence it most certainly is, with consumer confidence falling (details here) whilst "The labour market is very strong, with unemployment at historic lows. But the housing cycle is continuing to unwind and retail sales are patchy, according to figures from the Australian Bureau of Statistics." "A monthly business survey conducted by the NAB also found evidence of rising price pressures in the retail, agriculture and wholesale sectors. Retail petrol prices remain stubbornly above $1 a litre in most metropolitan centres and higher in regional and remote areas. The NAB survey predicted that annual inflation would likely creep towards the upper end of the RBA's comfort zone, lessening the chance of interest rate relief for Australia's mortgage holders." It all begs the question, does anyone really know what is going on at the moment? Alan Greenspan is confused on the world economy and no doubt he'd be scratching his head if he was here in Australia too. Reference: Henry Thornton 
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