Inflation

[divs4ever]

Keep an eye on New Zealand's inflation and how their Reserve Bank and government react.

*** Bloxham says while there are elements of the New Zealand story happening in Australia, it is not as extreme. ***

not as extreme or better concealed ??

NZ for all it's flaws still has a few extra levers ( half share in AIZ , GNE , MCY , MEZ ) and interests in some other NZ companies

they can actually control corporate policy at several essential businesses

yes Australia has been more resistant to inflation courtesy of commodity exports , but will our dependence on China become a millstone soon

 

[waterbottle]

Here's a great documentary outlining what is involved in the 'supply chain' problem.



To me, it seems that covid has triggered a demand splurge but also has meant a large number of jobs that were critical to the economy have been lost - either because those employees have died or have decided to retire/leave the industry as the covid risk outweighed any perceived employment benefit.

 

[againsthegrain]

I just checked the term deposit rates on line, I think she has been duped, I bet it's only 0.2% she probably miss heard. ?

its possible I got a email from Ubank they upping their interest in saver accounts to 1.25 or 1.35% something like that

 

[sptrawler]

Tell her I've got a crypto investment.

She would think it was some sort of weird crossword, you got paid for completing. ?

 

[againsthegrain]

She would think it was some sort of weird crossword, you got paid for completing. ?

she definately could get 2% there maybe even more.... negative that is

 

[macca]

The triple whammy of high prices, higher wages and higher power prices makes me wonder if everything goes up, or as you say businesses start going down and with it jobs and standard of living.
Interesting times.
On a brighter note, the MIL told me that she got 2% interest on her term deposit, for 12 months.

2.75% for 12mths at Macquarie, so she might be right

 

[3 hound]

Only about 3% of the price you pay at Coles and Woolies is their profit, the rest goes to suppliers and their running costs or tax, I wouldn't call a 3% profit margin gouging.

It's a pretty competitive market, if Coles and Woolies were making excessive profits, some one else would come on the scene and offer the same service for less, and steal a chunk of market share.

However, so far their competitors have to either offer less service or charge higher prices.

Eg, Costco and Aldi are examples where they charge lower prices but only do so by providing less service, while IGA, SPA and other market participants have a niche market but generally have slightly higher average prices.

Its in living memory in Australia where energy was produced locally in every town and there were "common" paddocks or "the commons" where locals kept their own "killer" beef, their own dairy cows and goats and grew their vegetables. I am not even that old and I lived when towns existed like this.

Actually think this now defunct model makes even more sense in 2022 than 1922.

 

[Value Collector]

Its in living memory in Australia where energy was produced locally in every town and there were "common" paddocks or "the commons" where locals kept their own "killer" beef, their own dairy cows and goats and grew their vegetables. I am not even that old and I lived when towns existed like this.

Actually think this now defunct model makes even more sense in 2022 than 1922.

I am not sure what that has to do with anything that I have said though, even in agrarian style places as you describe there is still butchers and bakers etc that want to be paid some sort of income for the value they are adding to the system, the doesn’t want to take a pay cut for his labour just because the raw material is cheaper.

My point was simply that there is a system in place that takes the animals from farm gate to your local shop, and that system operates at a cost that is not reduced by the farm gate price of cattle.

 

[3 hound]

I am not sure what that has to do with anything that I have said though, even in agrarian style places as you describe there is still butchers and bakers etc that want to be paid some sort of income for the value they are adding to the system, the doesn’t want to take a pay cut for his labour just because the raw material is cheaper.

My point was simply that there is a system in place that takes the animals from farm gate to your local shop, and that system operates at a cost that is not reduced by the farm gate price of cattle.

All good, your points made sense I just got on a tangent because I don't believe there is as much value adding by supermarkets going on as you think.

Is your figure of 3% for beef specifically or some kind of average?

Normally I buy wholesale steak in a carton just like Coles & Woolies do (or I buy directly from a grower) but today i bought a single steak (top cut) from a supermarket that was over $30 ($48/kg). I can afford that but I know a lot of hard working families would consider that so obscenely priced it's decadent food. The best steaks we buy are not premium, the premium quality is exported but we pay premium price.

 

[Garpal Gumnut]

To be honest a bit of inflation might not be all harmful.

The amount of cr*p I see in people's food trolleys when I shop in "poor" suburbs is astounding. Very little fresh veg or fruit, processed food, carbonated drinks, ice cream and confectionery.

Visiting people with young families one trips over a mountain of expensive toys before being assailed by Tom Cruise on a wide screen television which must have cost a bit, not to mention the Netflix nor Amazon subscription.

Australians need to curb their spending habits if inflation ramps up.

It is not brain science !

And much of the stuff they spend their money on is foreign made and imported or manufactured with foreign ingredients.

The latest mobile phones, tied to a provider, on instalment with white things sticking out of an ear.

On top of this the average punter spends more than even I do on gambling, pokies, keno etc. and alcohol.

Bring it on.

gg

 

[moXJO]

To be honest a bit of inflation might not be all harmful.

The amount of cr*p I see in people's food trolleys when I shop in "poor" suburbs is astounding. Very little fresh veg or fruit, processed food, carbonated drinks, ice cream and confectionery.

Visiting people with young families one trips over a mountain of expensive toys before being assailed by Tom Cruise on a wide screen television which must have cost a bit, not to mention the Netflix nor Amazon subscription.

Australians need to curb their spending habits if inflation ramps up.

It is not brain science !

And much of the stuff they spend their money on is foreign made and imported or manufactured with foreign ingredients.

The latest mobile phones, tied to a provider, on instalment with white things sticking out of an ear.

On top of this the average punter spends more than even I do on gambling, pokies, keno etc. and alcohol.

Bring it on.

gg

Surprisingly it's the good food getting more expensive. A lot of the crap is still cheap. I actively checked out of interest.

 

[Garpal Gumnut]

Surprisingly it's the good food getting more expensive. A lot of the crap is still cheap. I actively checked out of interest.

A very good point.

Inflation will affect the essentials so the simple answer is to stop buying the rubbish and spend a greater percentage on what is a need, not on what is a want.

gg

 

[moXJO]

A very good point.

Inflation will affect the essentials so the simple answer is to stop buying the rubbish and spend a greater percentage on what is a need, not on what is a want.

gg

I think if this happens it's an intro into a 90s style recession. I remember the late 80s having a lot of gyms everywhere similar to now. They literally all disappeared at once as spending on the essentials killed them all.
We even have a Labor government in, so the nostalgia is high.

 

[3 hound]

nostalgia is high.

Nostalgia for what, I think I missed your point.

Interesting my gym now puts its fans on short timers, got rid of the water chiller, everything in the vending machine went up by $2 on top of already overpriced stock and they only use the air-conditioning at strategic times.if ever.

All of those items were in abundance and now they are rationed, removed or price gouged.

On the bright side all that oversupply of fit teens that got personal trainer qualifications and were charging $80/session minimum 6 month program sign up, more money than what a physio charges, are now down to $20 a session pay as you go. (Still would never pay anyone at a gym to train me if they can't deadlift more than I can). Becoming a millionaire Instagram fitness model must have made perfect sense once.

 

[divs4ever]

three days from signing to working ( on the warehouse floor ) ?? LOL

when i worked at several places you were expected to be working on the first order within an hour ( and ideally be on the second or third order ) AND the machinery available was extremely limited only rarely were electric powered pallet jacks available , let alone robots and stuff

 

[Value Collector]

All good, your points made sense I just got on a tangent because I don't believe there is as much value adding by supermarkets going on as you think.

Is your figure of 3% for beef specifically or some kind of average?

Normally I buy wholesale steak in a carton just like Coles & Woolies do (or I buy directly from a grower) but today i bought a single steak (top cut) from a supermarket that was over $30 ($48/kg). I can afford that but I know a lot of hard working families would consider that so obscenely priced it's decadent food. The best steaks we buy are not premium, the premium quality is exported but we pay premium price.

3% is across their entire sales, on everything.

Some things are loss leaders, some things are higher profit, meats are often used as loss leaders.

Their value adding is simply compiling all the products you want in a single location that’s convenient to where you live, which actually does cost a lot of money.

Think about all the rent for the stores and distribution centres alone, add to that air conditioning, refrigerators, then wages etc, all those costs eat up a decent chunk of the gross profit margin.

 

[Smurf1976]

A lot of experience and know how has retired. Younger guys chase the highest paying, easier, fast jobs. They lack a lot of what were considered the basics.

Slightly off topic but related is that society has waged a war on expertise for quite some time now.

That further adds to consumer cost inflation since something that really only needs a minor repair is now a total replacement simply because whoever's doing it doesn't know how to diagnose the problem.

 

[Smurf1976]

Interesting my gym now puts its fans on short timers, got rid of the water chiller, everything in the vending machine went up by $2 on top of already overpriced stock and they only use the air-conditioning at strategic times.if ever.

I don't know anything about the cost structure of running a gym but I can say with certainty that fans and water chillers are both pretty cheap.

If they're cutting those sort of costs then it's akin to the office that looks to cut down on the cost of ball point pens or photocopying. It's scraping the bottom of the barrel stuff and suggests things are pretty desperate.

 

[divs4ever]

Slightly off topic but related is that society has waged a war on expertise for quite some time now.

That further adds to consumer cost inflation since something that really only needs a minor repair is now a total replacement simply because whoever's doing it doesn't know how to diagnose the problem.

sadly , i agree , including the implication this has been in progress for decades

i assumed they were readying for increased automation , i hope they enjoy the increased inflexibility , they have embraced

 

[divs4ever]

I don't know anything about the cost structure of running a gym but I can say with certainty that fans and water chillers are both pretty cheap.

If they're cutting those sort of costs then it's akin to the office that looks to cut down on the cost of ball point pens or photocopying. It's scraping the bottom of the barrel stuff and suggests things are pretty desperate.

not trying to limit the spread of the 'virus ' ??

am not so sure about the water chiller costs , chilled tap water has some minor dangers ( but dangers just the same ) and costs might be increasing for bottled water ( not just delivery costs )

and don't ever assume those damned photocopiers are cheap ( either to buy , maintain . or to feed ) some of the fancy ones are software ( version ) specific , to boot

now maybe the gym is stressed by lower current patronage , and maybe there are extra regulations currently