A bit more on yesterday’s inflation data from Australia, this time a piece from the Wall Street Journal:
- Economists say the shock rise in inflation has stripped the Reserve Bank of Australia of any flexibility to cut rates further this year to support the economy.
“The consumer price index numbers reinforce the idea that interest rate cuts are off the table and add support to the arguments for higher rates by end 2014,” said Diana Mousina, an economist at the Commonwealth Bank of Australia.
Kieran Davies, chief economist at Barclays Australia:
- said the central bank was in a bind, and that it would be forced to revise higher in February its forecasts for benign inflation–snuffing out any talk of further rate cuts, despite slow growth.
“The RBA is in a difficult position given sluggish growth, a sluggish job market and higher underlying inflation,”
And, from Adam Boyton, the chief economist at Deutsche Bank in Sydney:
- rising government charges are at the heart of the domestic inflation problem
- “government inflation” is running at annual rate of 5.7%. Inflation elsewhere in the economy is running at just 1.8%.
- government price range from environmental taxes to electricity, water and sewerage costs, coupled with higher levies on alcohol and tobacco
“Within the CPI there are a number of components where price changes over recent years have largely been the result of government policies … While many of these are one-off policy decisions, these various ‘one-offs’ are starting to add up to a persistently high rate of government inflation.”
Aussies Stunned By Inflation Surprise (may be gated)
