Rates heading to zero
Headline inflation came in 1.59 per cent for the year to June, with a surge in the price of auto fuel this quarter, but not a whole lot else.
It's a sign of the times - and of how inflation targeting credibility has been stretched - that such a weak result was met with a chorus of headlines about strengthening inflation.
Looking at the core measures, trimmed mean inflation of 0.42 per cent for the quarter saw the annual result slow from 1.64 per cent to 1.61 per cent, while the weighted median inflation measure decelerated quite sharply from 1.37 per cent towards a record low at just 1.24 per cent.
Lumping the two in together, here's that 'rising' inflation chart, with not too much sign of the 2 to 3 per cent target band being threatened since 2015, and the trend now weakening for five consecutive quarters:
Hmm!
If you were being generous and looking very closely, you might say that the deceleration happened from a marginally revised up base.
But, still.
But, still.
Low inflation was both imported and due to weak demand and wages growth domestically.
Non-tradables inflation was benign over the 2019 financial year at 1.8 per cent, and tradables inflation considerably slower still at 1.1 per cent.
Rental CPI, meanwhile, has been tracking below income growth for half a decade.
The wrap
We're heading towards half a decade of inflation below target, risking talk of asymmetry.
As noted yesterday residential construction is now dropping off at a worrisome pace, which will result in tens of thousands of job losses and, presumably, the unemployment rate rising away from NAIRU towards 5½ per cent.
Cement maker and supplier to the construction industry Adelaide Brighton (ASX: ABC) scrapped its interim dividend today amidst a swathe of impairments.
Meanwhile one of the largest private developers in the country, The Ralan Group, has announced its collapse.
Voluntary administration risks sending "billions of dollars of east coast apartment projects" (AFR), thousands of associated jobs, and several thousand apartments presently under construction hurtling towards the gurgler.
Plenty of other developer groups are reportedly teetering on life support.
