Australian Inflation

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nigel's picture
nigel
Status: Silver Member (Offline)
Joined: Apr 15 2009
Posts: 145
Australian Inflation

I am slightly confused. I have been keeping an eye on Australian prices for a while. In the last six months I have watched a cheap loaf of bread rise in price from $1 to $2.15; a can of generic peas rise from .89c to $1.39; tinned fruit from $2.20 to $3.95; a take away meal rise from $11.30 to $15.90; Lamb chops from $4 approx to $8;

It isn't just a few items. My shopping bill has gone up 28% in the last six months. Taken over a year that's a 50% inflation rate for food. I usually purchase the lowest cost, best value items, so in theory there should be no substitution in my inflation rate calculation.

A major supermarket chain just announced a rise of 9.5% for sales in the June quarter. Now why in a technical recession would people be buying more food, or more expensive food. My family is eating less expensive food not more expensive. I have a theory that the rise in sales is actually a rise in price of about 50% to compensate for about a 15-20% fall in sales.

To make matters worse the government had plans for a web site that monitored grocery prices. The plan was scrapped about three weeks before the June inflation statistics came out. Hmmmm.

So here is what I need some help with:

1. Has anyone else noticed something fishy with food prices and inflation statistics?

2. Do we have an Aussie version of shadow stats?

ejanea's picture
ejanea
Status: Bronze Member (Offline)
Joined: Oct 2 2008
Posts: 53
Re: Australian Inflation

 I think you are correct.  I don't live in the city (within 1 hour though)  and bread is now $2.60, most foods have increased significantly (even dried beans and flour!)   Until now the profits for the big supermarkets have gone up,   but they never differentiate between volume of sales or merely increased price...  the increased turnover can be just price rise rather than more stuff being bought.

Debt is as big an issue here as in the US and unemployment is a problem.  People aren't spending anything extra.  Even Harvey Norman has had a drop in sales and profit now that the $900's have run out!

I don't know how things will go here,  but I think that we are facing the same issues as those faced by my friends in CA (where I used to live.)  I think that we are probably going through the same processes... just delayed a bit by the first home owners grant that propped up the housing market for a while and the stimulus package that gave people a bit of extra spening money for a couple of months.  Together these added up to a delay,  but  not a solution... Aust still has significant debt and reducing jobs and income.  Check out Steve Keen's blog.

Jane

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Australian Inflation

Yep, I agree too......  we don't buy much food at all from the shops anymore, but the other day we were stuck in the big smoke and I had to go to a supermarket to buy dinner....  and most veggies were 5 to 7 bucks a kilo!  I was blown away and so thankful we grow most stuff now..

Actually, I bought some chicken grain the other day and noticed that the 20 kg bag I had to buy (they'd run out of the usual stuff I buy in 25 kg lots) cost more than the bigger bag.  Go figure!

Bread is now ridiculously expensive, and I make ours in an electric bread oven.  Works wonders, and you can buy a 20kg bag of bread flour for about $22, a fraction of the cost of buying bread, and it allows you to experiment and make healthier bread.

Mike

ejanea's picture
ejanea
Status: Bronze Member (Offline)
Joined: Oct 2 2008
Posts: 53
Re: Australian Inflation

 Hi Mike,  

I do the same... and buy very little now.  I buy my flour from a local organic farmer/miller  (Four Leaf) and I am conscious that it's important to network with the suppliers of those things that I can't grow...  mostly local families and businesses in my small town.  

I saw this too....  www.debtdeflation.com/blogs/2009/07/24/australia-in-the-red/    if anyone is close enough to get to this (I'm not)   I'd love to hear about it.

Madam George's picture
Madam George
Status: Member (Offline)
Joined: Jul 13 2010
Posts: 1
Re: Australian Inflation

I agree that food prices are increasing, at least they are in Victoria.  I haven't actually noticed the increase in bread prices because I bake all my own bread.  I buy 25Kg sacks of bio-dynamic wheat from our local organic food co-op and grind the wheat myself.  I have an electric grinder I bought 20years ago and I bought a handle at the same time - just in case!  I don't particularly like 100% wholewheat bread so I make a 60% unbleached white flour and 40% wholewheat loaf.  I find my family prefer that ratio.  The organic unbleached flour I buy in 5Kg bags from our local health food shops (Kialla Mills) and I have noticed a big price increase in that item.  It is still cheaper, it seems, than buying shop bread which I find disgusting.  And why does all bread now contain soy flour and Canola oil?  We grow most of our own vegies but still need to buy meat.  Aside from Lamb which is very expensive I have found all other meat still reasonably priced.  I think the speculation that people are buying less food from the supermarkets might be correct.  I never buy food from China - too afraid of their health and safety laws (or lack of them).

Fabion's picture
Fabion
Status: Member (Offline)
Joined: Aug 13 2010
Posts: 5
Re: Australian Inflation

In that case Pravin can start with indexed bonds' yields and as a very rough estimate of inflation deduct from these yields the yields of regular treasuries of matching maturities. One can of course fine tune it as one goes along. This should give a better estimate than what can be obtained from most of the think-tanks as people part with money only when they really believe in some estimate.

Care may have to be taken for short / over supply of certain maturities which will distort the estimates. But under the circumstances I feel this is a reasonably good approach to follow.

Fabion's picture
Fabion
Status: Member (Offline)
Joined: Aug 13 2010
Posts: 5
Re: Australian Inflation

In that case Pravin can start with indexed bonds' yields and as a very rough estimate of inflation deduct from these yields the yields of regular treasuries of matching maturities. One can of course fine tune it as one goes along. This should give a better estimate than what can be obtained from most of the think-tanks as people part with money only when they really believe in some estimate.

Care may have to be taken for short / over supply of certain maturities which will distort the estimates. But under the circumstances I feel this is a reasonably good approach to follow.

loriscott's picture
loriscott
Status: Member (Offline)
Joined: Jul 29 2010
Posts: 3
Re: Australian Inflation

Hi all in Oz, glad I found you over here.  re: Groceries.  You are correct, prices are climbing.  I think we are seeing the tail end of lots of petrol price increases reflect in food.  I think when the GFC hit, companies found it was a good excuse to plead poor and put their prices up (flow on til now) and the incredible wet season we've had is not helping commodity prices.  The overseas commodity price increases allow oz producers to put their prices up in comparison to export prices.

What bothers me is that I'm starting to see a reduction in choices that I can buy on the shelf.  And when you stand and read a lot of labels, virtually everything is produced overseas or from imported ingredients.  I like to buy bread flour in 25kg bags and I'm finding there is no where I can get this anymore.  I can buy large bags of bread MIX like for bread makers but not plain old hard flour.  And so on.  Just little things here and there but frustrating that what I have used for 20 years is now not available.  Are producers/ manufacturers being bought out by larger (multinational) and moving manufacturing off shore or reducing the number of competing products?

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