Maria Irene
On Twitter, where economists and industry leaders meet to publicly dissect and discuss economic developments, an array of opinions on Australia’s CPI has surfaced. Michelle Marquardt, ABS head of prices statistics, contributed a somewhat calming tone to the discourse, emphasizing the perspective. She noted, “While prices have kept rising for most goods and services, many increases were smaller than we have seen in recent months. When excluding these volatile items, the decline in inflation is more modest.”
RBA Governor Phillip Lowe, on the other hand, struck a more urgent note. He acknowledged that while the decrease in inflation is notable, it still stands at a concerning 7%. Lowe hinted that the RBA might need to intervene with additional interest rate hikes to help inflation find its way back to target levels.
Before the release of the recent CPI data, all four major banks had predicted another wave of interest rate hikes. National Australia Bank went a step further, forecasting an increase to 4.6% by August.
However, not everyone agrees with this prediction. ING Think, for instance, believes that the recent deflation may cause the RBA to hold steady on rates in July. Their economists warn that although the moderation in inflation is welcome, it is difficult to guarantee that this trend will continue in the months to come.
Aaron Money, Chief Economist at the Chamber of Commerce and Industry WA, shared his view, stating, “Core inflation is still high, and not decreasing at the rate the RBA has forecast. There is still pressure for a rate rise next week.”
In contrast, Alan Oakley, a former serial newspaper editor at News Corp Australia and Fairfax, sees the big fall in the monthly inflation number as a sign to return to quarterly data and RBA meetings. He claims that monthly movements are economically unsound and unnecessarily harmful, financially and mentally.
Lindsay David, an influential economist on Twitter, echoed the need for caution. He suggested that the RBA should consider holding steady, particularly considering foreign exchange risks and offshore bank funding.
An anonymous Twitter user, who identifies as a database software developer, sailor, and father, offered an intriguing analysis. He drew attention to the monthly CPI data, stating, “CPI dropped 0.4% between April and May! CPI change from Feb to May was 0.9% = 3.8% per year. Since December – 5 months- it’s been 0.7% change = 1.6% per annum which is below the RBA target. Most of the last 12 months inflation was May-Dec!”
Economics commentator “Economics by Liam ” speculated about the RBA’s next steps, noting that although the case for a pause is building, the situation remains far from resolved. The conversation isn’t just about numbers and rates; it also carries a touch of humor. Economist Stephen Koukoulas joked, “I am reporting people to the Human Rights Commission for torturing the data so that it says ‘inflation isn’t falling.'”
As Australia’s inflation situation continues to develop, so too does the discourse surrounding it. The multitude of voices and perspectives from Twitter and beyond not only informs but also enlivens the conversation. It’s a reminder that economics, far from being a dry subject, is a dynamic and evolving field that deeply affects our everyday lives. So, whether you’re a novice or a seasoned economist, stay tuned to the conversation. There’s always more to learn.
