Inflation

[sptrawler]

In W.A it seems wages are putting the pressure on inflation IMO, trying to get a tradie to do a small job at a reasonable cost just isn't happening, the housing stimulus is still running through the system. Also my son who works in mining is getting pay rises without asking for them, skills shortage is so accute, at the moment.

 

[eskys]

might not be so temporary , businesses usually try to claw back cost increases over time , and if so, of those increased costs are wages raised to reduce staff shortages .. well it is hard to reduce staff wages at a later date ( and retain staff )

other likely cost increases include energy , sure oil,gas , petrol might come back you still have electricity costs

also there will probably be an increase in the cost of borrowing money , currently it is very low ( in some places ) you would expect at least a return to historic averages

there is also a chance of increased regulation, and compliance costs ( these sort of folks just can't help themselves )

Yes, agree, divs. I was thinking more about the post of mine yesterday when I said that inflation will result because of Covid causing sick leave, hence leading to all kinds of problems, eg logistics, production, which in turn cause shortage of supply. This I think might/may cause a rise in the price of food and merchandise. My thinking is, if Covid is not arrested and continues to cause disruption, then over years, the economy will be affected. However, I think central banks are within their means to take slow steps to cause as little disruption as possible to world economies, some of which may not be within their control........the future is not mine to see, I can only speculate.

 

[moXJO]

might not be so temporary , businesses usually try to claw back cost increases over time , and if so, of those increased costs are wages raised to reduce staff shortages .. well it is hard to reduce staff wages at a later date ( and retain staff )

other likely cost increases include energy , sure oil,gas , petrol might come back you still have electricity costs

also there will probably be an increase in the cost of borrowing money , currently it is very low ( in some places ) you would expect at least a return to historic averages

there is also a chance of increased regulation, and compliance costs ( these sort of folks just can't help themselves )

I think the situation of "covid panic" is temporary. After that it's the masses sentiment.

I've been told supply line issues should sort out by midyear. But that means nothing. It's possible we get a sugar hit if we see an end to the last 2 years of covid. But if the easy money is about to evaporate then it is what it is.

 

[JohnDe]

might not be so temporary , businesses usually try to claw back cost increases over time , and if so, of those increased costs are wages raised to reduce staff shortages .. well it is hard to reduce staff wages at a later date ( and retain staff )

other likely cost increases include energy , sure oil,gas , petrol might come back you still have electricity costs

also there will probably be an increase in the cost of borrowing money , currently it is very low ( in some places ) you would expect at least a return to historic averages

there is also a chance of increased regulation, and compliance costs ( these sort of folks just can't help themselves )

Most of those are not big enough issues to cause a major inflation risk.

Wages may increase but not until demand increases significantly, Covid is dampening demand. Besides, wages are starting from a low anyway, any increase will be just catch up.
Electricity costs will not rise significantly, there is new competition coming, wait and see. There could also be a drop in prices.
Oil and gas, yes I can see prices going up especially for lubricants.
Many businesses are flush with cash, waiting for opportunity and trades.
Not many governments will be game to increase regulation and compliance costs when they are trying to keep the economy going and trying to rev it up.

I purchased some quality wines at very reasonable prices during the Christmas holiday period, it seems that some companies have full warehouses and need to make some room.

Prices are all over the place at the moment, all dependent on the industry type and affects of Covid issues. However, there is fear in the consumer which is holding back everything. There is so much more that we haven't looked at - property prices (starting to level?), hospitality, electronics.

Just had a thought, my fuel bill has dropped by 60% since July 2021(we have a fuel card). The difference is that we now own an EV, and in comparison my electricity bill went up 10% in the same period.

How many more EVs will be sold during 2022 and what affects will this cause?

 

[eskys]

I like you, John, you can always see outside the box Something not many are able to do so, and you can explain things more clearly, may I say more eloquent? ( By the way, nice to see you again) Well, that's all said and done, John, Well done

 

[UMike]

Most of those are not big enough issues to cause a major inflation risk.

Wages may increase but not until demand increases significantly, Covid is dampening demand. Besides, wages are starting from a low anyway, any increase will be just catch up.
Electricity costs will not rise significantly, there is new competition coming, wait and see. There could also be a drop in prices.
Oil and gas, yes I can see prices going up especially for lubricants.
Many businesses are flush with cash, waiting for opportunity and trades.
Not many governments will be game to increase regulation and compliance costs when they are trying to keep the economy going and trying to rev it up.

I purchased some quality wines at very reasonable prices during the Christmas holiday period, it seems that some companies have full warehouses and need to make some room.

Prices are all over the place at the moment, all dependent on the industry type and affects of Covid issues. However, there is fear in the consumer which is holding back everything. There is so much more that we haven't looked at - property prices (starting to level?), hospitality, electronics.

Just had a thought, my fuel bill has dropped by 60% since July 2021(we have a fuel card). The difference is that we now own an EV, and in comparison my electricity bill went up 10% in the same period.

How many more EVs will be sold during 2022 and what affects will this cause?

As a restaurant owner cost of business has gone through the roof.
December (and we should of done this sooner) we raised prices 10% to more than cover them all.

End result is we are doing more with less. The few staff we have get paid more but do more work. Cost of Goods absorbed by charging more.

This is just my corner atm.

 

[JohnDe]

As a restaurant owner cost of business has gone through the roof.
December (and we should of done this sooner) we raised prices 10% to more than cover them all.

End result is we are doing more with less. The few staff we have get paid more but do more work. Cost of Goods absorbed by charging more.

This is just my corner atm.

Yes, as mentioned hospitality is one to watch

Prices are all over the place at the moment, all dependent on the industry type and affects of Covid issues. However, there is fear in the consumer which is holding back everything. There is so much more that we haven't looked at - property prices (starting to level?), hospitality, electronics.

I also have a business, and in my industry our usual quiet months of the year have not appeared for the past two years. We are flush with funds looking to invest in our businesses, but due to uncertainty we wait.

 

[JohnDe]

I like you, John, you can always see outside the box Something not many are able to do so, and you can explain things more clearly, may I say more eloquent? ( By the way, nice to see you again) Well, that's all said and done, John, Well done

Thanks eskys, nice to hear from you again.

 

[mullokintyre]

US inflation hits 7% and is now the highest in 40 years.
ABC NEWS

Data showed the US consumer price index surging a whopping 7 per cent in the 12 months through December, the biggest annual increase since June 1982, but in line with economists' forecasts.

The economy is experiencing high inflation — well above the Fed's 2 per cent target — as the COVID-19 pandemic disrupts supply chains. The high cost of living is also weighing on US President Joe Biden's approval rating.

However, investors appeared to be comforted by the fact inflation was not worse than feared, and that the Fed was unlikely to be more aggressive than expected in hiking interest rates and tightening monetary policy.

"Today's inflation report continued to reinforce the theme that gaudy price gains are not standing in the way of demand," Rick Rieder, BlackRock's chief investment officer of Global Fixed Income, said.

Glad that investors are comforted that it was not worse than feared.
For something that the FED insists is transitory, and is not only persisting, but keeps getting higher.
For the price makers, its great.
For the price takers, not so great.
Arguments over the level "transitoriness" of inflation are immaterial to the majority of Americans.
It still has a profound effect on their lives.
As I wrote some time ago, the effects of inflation remain forever, they don't go away.
The fried chicken that went from a buck to a buck10 will not go back to a buck if the inflation is transitory or not.
And they will remember come election time that although some of the causes of inflation were because of the policies of previous incumbent in the White House, pretty much all of the effects are under the watch of the existing incumbent.
Whether deserved or not, this will not play out well for democrats in the up coming mid terms, and unless somethings change pretty quickly in the near future, it may even cross into the 2024 presidential election.
Mick

 

[divs4ever]

ECONOMIST SLAMS BIDEN AFTER INFLATION NEWS: YOU ARE PAYING 'BIDEN'S INFLATION TAX' | NATIONAL REPO..​

but hopefully the older members saw this coming , right ??

 

[CityIndex]

The US Dollar is suffering despite CPI coming in at a 40-year high. However, given that the 7% YoY increase was exactly in-line with the market's expectation, traders probably feel like it is unlikely the Fed will accelerate their rate hike plans.

This helped a lot of currency pairs breakout overnight, including AUD/USD, which is trading at its highest level since late November. Can the pair rally back above 0.7300 or is there a chance that tonight's US PPI release held the USD regain some strength?

 

[JohnDe]

US inflation hits 7% and is now the highest in 40 years.
ABC NEWS

Glad that investors are comforted that it was not worse than feared.
For something that the FED insists is transitory, and is not only persisting, but keeps getting higher.
For the price makers, its great.
For the price takers, not so great.
Arguments over the level "transitoriness" of inflation are immaterial to the majority of Americans.
It still has a profound effect on their lives.
As I wrote some time ago, the effects of inflation remain forever, they don't go away.
The fried chicken that went from a buck to a buck10 will not go back to a buck if the inflation is transitory or not.
And they will remember come election time that although some of the causes of inflation were because of the policies of previous incumbent in the White House, pretty much all of the effects are under the watch of the existing incumbent.
Whether deserved or not, this will not play out well for democrats in the up coming mid terms, and unless somethings change pretty quickly in the near future, it may even cross into the 2024 presidential election.
Mick

Don't jump in before checking the depth.

Media is doing what they do best, sharing the bad news. You may be correct, inflation may take off like a rocket and crash the economy and the market, but before we prepare for the end maybe we should research all the information, rather than just the headlines. That was Cathy Wood's point (see video in my above post).

I have some relatives in the US, so far I have not heard any complaint about food prices, though I do accept that different states would have different issues. So far a couple of my cousins are only upset about the price of 'gas', Covid restrictions, enforcement of mask wearing and vaccinations, and Biden .

We are in uncharted territory, no economist or policy maker has lived through or has an instruction Manuel of what to do during and after a world pandemic that is affecting most aspects of our lives and business.

Inflation could continue to climb, or it could jump around affecting different parts of the economy in different ways, it could be a blip and then back to normal. We don't know, so lets not through all our eggs into one basket, at the moment.

I am watching with a very keen eye.

Meat and chicken, price per kilogram​

• Chilled boneless beef 7 - 8 USD
• Pork fillet 4 - 5 USD
• Sliced beef, fillet 6 - 8 USD
• Ribeye beef steaks 9 - 10 USD
• Marinated beef for barbecue 8 - 11 USD
• Chicken Breasts 3,3 - 4 USD
• The whole chicken 2,6 - 3 USD

Prices for fish and seafood per 1 kg​

• Salmon filet 17 - 30 USD
• Salmon steaks 12 USD
• Fillet of catfish 8 USD
• Tuna fillet 28 USD
• Trout ocean filet 40 USD
• Shrimp 12 - 14 USD
• Crab 22 USD

Vegetables and fruits​

Prices of vegetables per 1 kg​

• Potato 1 USD
• Onion 1 - 1,5 USD
• Tomatoes 1 USD
• Broccoli 0,80 USD
• Peppers 3 - 5 USD
• Salad mix 150 gr 3,3 USD

Food Prices in USA grocery stores

A sample of food prices from several stores: how much is meat and milk, vegetables and fruits, alcohol, bread and other food products in America

www.globalprice.info

 

[mullokintyre]

Don't jump in before checking the depth.

Media is doing what they do best, sharing the bad news. You may be correct, inflation may take off like a rocket and crash the economy and the market, but before we prepare for the end maybe we should research all the information, rather than just the headlines. That was Cathy Wood's point (see video in my above post).

I have some relative in the US, so far I have not heard any complaint about food prices, though I do accept that different states would

Food Prices in USA grocery stores

A sample of food prices from several stores: how much is meat and milk, vegetables and fruits, alcohol, bread and other food products in America

www.globalprice.info

The picture you posted is a sapshot in time, it does not say whether the prices are going up down, or staying the same.
From US Inflation Calculator
Food increased 6.3% for the year, Energy by 29.3%, and the rate for all items in the basket, 7%.
The average monthly increase for the year was 3.9%, with all of the big increases in the backend of the year.
We will have to wait for some time to see which way this will all go.
Mick

 

[PetEarwig]

I'm currently in the US and have been for the past 8 months. I would say the stats say inflation is rising, but it isn't until you 'feel' the impact of price rises that you start caring. I haven't 'felt' any adjustments in food prices at either grocery stores or restaurants. However, construction materials I do see some changes, and significant shortages of some items. Depending on your link in the chain you may be feeling inflation in different ways. I'm just a consumer.

 

[noirua]

Back in the 1970s there was a situation that came about due to the 350% to 400% increase of the oil price and in those days oil was far more critical than today though the basics are still in place.
Inflation rose far above interest rates the UK had 25% inflation with interest rates in the 7% to 8% range on an as-bad-as-it-gets scenario at its peak.
Australia's inflation peaked at 15.42% in 1974 and averaged over 10% for 9 years until 1983. Interest rate in 1974 was 8.38%. Interest rates averaged over 10% from 1974 to 1996.

Interest Rates Australia

Historical Interest Rates for Australia since 1959. See how bank lending rates have changed over time. Rates are on the increase currently.

www.orangefinance.net.au

Australia Inflation Rate 1960-2024

Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used.

www.macrotrends.net

So we can see how disaster can befall and recovery takes very many years.

Today very many countries are hit with high gas prices increasing nearly as much as oil did in the 1970s.

Has the world learnt from all of this history. In a nutshell 'NO'! They never seem to realise that the basics are never different even if the basics are 50 years or more later. They are in fact Always the Same.

 

[JohnDe]

Back in the 1970s there was a situation that came about due to the 350% to 400% increase of the oil price and in those days oil was far more critical than today though the basics are still in place.
Inflation rose far above interest rates the UK had 25% inflation with interest rates in the 7% to 8% range on an as-bad-as-it-gets scenario at its peak.
Australia's inflation peaked at 15.42% in 1974 and averaged over 10% for 9 years until 1983. Interest rate in 1974 was 8.38%. Interest rates averaged over 10% from 1974 to 1996.

Interest Rates Australia

Historical Interest Rates for Australia since 1959. See how bank lending rates have changed over time. Rates are on the increase currently.

www.orangefinance.net.au

Australia Inflation Rate 1960-2024

Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used.

www.macrotrends.net

So we can see how disaster can befall and recovery takes very many years.

Today very many countries are hit with high gas prices increasing nearly as much as oil did in the 1970s.

Has the world learnt from all of this history. In a nutshell 'NO'! They never seem to realise that the basics are never different even if the basics are 50 years or more later. They are in fact Always the Same.

Yes, and don't forget the 1990's 'The recession we had to have'. No inflation an economy that was a mess and caused a lot of heartache and bankruptcy.

The Hawke Labor Government initially responded to the crisis by asking the Conciliation and Arbitration Commission to defer its national wage case. Commodity prices dropped and the Australian dollar sharply declined. The Reserve Bank conducted a $2 billion intervention to hold the dollar at 68c but it crashed to 51c. In December 1987, Keating said that the Australian economy would weather the storm because the Hawke Government had already balanced its Budget and brought down inflation

The point is that no one really knows what the whole outcome of the Covid pandemic will bring individual counties and the whole world.

Property sales are starting off slow this year. If property prices crash will that cause inflation?

Natural gas sales are ramping up, competition is increasing. Developed countries, including China, are moving to new forms of energy. How will this affect the pricing of natural gas?

Let's wait till all the numbers and information is out before jumping to conclusions about inflation. There are a lot of factors to take into account and a new dilemma that no economist, government or treasurer have a manual for.

Early 1990s recession in Australia - Wikipedia

en.wikipedia.org

 

[JohnDe]

I'm currently in the US and have been for the past 8 months. I would say the stats say inflation is rising, but it isn't until you 'feel' the impact of price rises that you start caring. I haven't 'felt' any adjustments in food prices at either grocery stores or restaurants. However, construction materials I do see some changes, and significant shortages of some items. Depending on your link in the chain you may be feeling inflation in different ways. I'm just a consumer.

My wife's cousin is married to a Texan, he is in the building trade and says that timber is more expensive than gold. However, home renovations and additions are booked for the next 24 months.

 

[eskys]

I thought of this thread this morning at the vegetable patch.

The patch is bordered by Sir Walter Buffalo, healthy and green.
I saw 2 strong shoots poking out from the bed, and without looking deeper, assumed the Buffalo grass had infiltrated the bed, as they often do if left unchecked. Lo and behold, I'd destroyed the promising ginger which had been growing unnoticed until now.

Inflation has scared the daylights out of us, causing some of us into inaction and inertia. Maybe we should be thinking now of what are the sectors/stocks we can look at so we can prosper once this Omicron is over, production and logistics back to normal etc....We can watch and monitor, no need for jump in now. I see Sean K is doing just that, good on him.

 

[mullokintyre]

One of the Myriad of reasons why goods are slow/hard to come by could be just plain theft.
Containers Busted Open

Mick

 

[divs4ever]

One of the Myriad of reasons why goods are slow/hard to come by could be just plain theft.
Containers Busted Open

Mick

interesting i hadn't thought of 'theft in motion' like that

i was more thinking of out-dated stock written off and insurance claimed