Yesterday’s quarterly inflation release, which showed prices falling by 0.3% over the December quarter across Australia, cemented expectations of a 1% cut in interest rates in February. How things have changed! My very first Stubborn Mule post back in May 2008 examined the inflationary pressures that had so concerned the Reserve Bank and led them to keep interest rates high well into the financial crisis. In that post I used a heatmap to dig down into the drivers of inflation, and a quick comparison of the latest December inflation rate with inflation six months earlier gives a very clear illustration of where prices are falling.
Austalian Quarterly Inflation – Dec 2008
(click to enlarge)
Soaring petrol prices have led to all sorts of calls for action to help reduce prices. The Opposition called for a 5 cents per litre reduction in the excise on petrol, which currently stands at 38.1 cents per litre. (See note below for an explanation of the strike-throughs). the abolition of the double taxation of petrol by eliminating Goods and Services Tax (GST) on petrol excise. Since the excise is currently 38.1 cents per litre, this would save 3.8 cents per litre. One Victorian Liberal MP, Chris Pearce, went further and called for a 10 cent reduction in petrol excise. The Rudd Government initially claimed that there was nothing more that they could do, but then buckled to the pressure and has proposed the introduction of a national FuelWatch scheme aimed at promoting price transparency at the bowser. The Minister for Competition Policy & Consumer Affairs, Chris Bowen, has indicated that this scheme is expected to save around 2 cents per litre. So, what is going on with petrol prices and what are the merits of these proposals?
The Joint Economic Committee is a standing committee of the US Congress is charged with reporting on US economic conditions. Needless to say, the Committee is making a close study of the financial turmoil triggered by the collapse in US house prices and rising delinquency rates among “sub-prime” borrowers. Recently Alex J. Pollock gave testimony to the Committee entitled “Regulatory Implications of the Housing and Mortgage Bubble and Bust”. Continue reading
Inflation in Australia has been running well outside the 2-3% range targeted by the Reserve Bank of Australia—the most recent figure was 4.3% for the 12 months to March 2008—which is why interest rates have been on the rise for the last couple of years. So what has been driving prices up in Australia? One useful way to get a sense of what has been happening is to use a type of chart known as a treemap (sometimes called a “Map of the Market”). These charts tend to be pretty busy, but can be a great way to explore a rich set of data.