Inflation in Australia

The latest data on consumer prices in Australia was released today by the ABS. It was for the December 2022 quarter.

By itself, changes in the CPI for a prior quarter do not give any information about what is likely for the current or future quarters. Still, many commentators were out in force today predicting this or that about future prices. Alan Kohler, once but no longer respected journalist, said in July 2022 that inflation had peaked. He said it would reduce in September 2022 and again in December 2022. He was wrong.

The CPI is not an indicator of inflation. It is a symptom. It is not leading, it is lagging. Remember, when the word inflation was coined, it meant an increase in the money supply. Rising prices were always the result and gradually usage changed so that inflation came to mean rising prices, in common parlance.

I’ll have more to say in the next week or so about future inflation after the statistics for the December quarter’s producers’ prices and the money supply are released.