Pipeline pressures ease
Energy prices were easing in the fourth quarter, and roughly as expected growth in the producer price index slowed from 1.9 per cent to just 0.7 per cent in the fourth quarter.
That's the slowest growth since June 2021 as pipeline pressures began to ease late last year.
I haven't had time to update my chart packs today yet, but here's a Tweet from Shane Oliver, Chief Economist of AMP:
US and European gas prices have fallen by around three-quarters from their highs, overwhelming concerns about supply following the outbreak of the war in Ukraine.
Source: The Daily Shot
Wholesale electricity prices have followed a similar trajectory in Europe.
Looking ahead, consumer price inflation from goods is leading the way down in the US and many other countries, with Australia likely set to follow this trend with a lag in 2023.
Source: Shane Oliver, AMP
The big one for Australia has been construction costs, which absolutely exploded since mid-2020 and in turn drove a large chunk of our consumer price inflation.
However, in real time materials prices here are now easing significantly now.
Thomas Devitt with the HIA chart:
Source: Tom Devitt, Twitter
The rise and decline has largely been a result of trends in supply pressures, rather than a direct impact from interest rates (the government stimulus packages in 2020 pumped a very large volume of demand for new housing, but have now been wound back).
