Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

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"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

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Wednesday, 25 January 2017

Inflation under target again

Inflation subdued (except vegetables)

Very few signs of inflationary pressures, then, with year-on-year declines in the prices of clothing and footwear, transport, communication, and recreation and culture. 

In the December 2016 quarter there was a jump in the price of tobacco (more excise) and automotive fuel, leading to a headline inflation result of 0.5 per cent. 

The only other noticeable price increases have been for vegetables, which jumped by 12.5 per cent over the year, with a lack of supply particularly impacting the price of potatoes, capsicums, broccoli, and cauliflower. 

The annual figure for headline inflation ticked up a little to 1.5 per cent, but remains well below the target range of 2 to 3 per cent.

Core blimey

The more closely watched core inflation figures (known as the 'trimmed mean' and the 'weighted median') also implied a pace of inflation below the target range, if only just, though to one decimal place both measures were rounded down to 0.4 per cent. 

Year-on-year both core measures were very soft at just 1.6 per cent and 1.5 per cent respectively.

If you were looking for signs that the low point for inflation is now in the rear view mirror, the increase in non-tradables inflation - a proxy for domestic prices pressures - to 2.1 per cent would add weight to your argument. 

Interest rates

The figures received a mixed response, particularly with regards to the outlook for interest rates.

It certainly seems odd that folks are talking about interest rate hikes with annual inflation remaining so far under the target range.

If the prices of iron ore and coal start to fall again in 2017, which seems more than likely, then there might yet be further rate cuts to come. 

Futures markets take the balanced view that the cash rate is likely staying right where it is for 2017 in its entirety.