In the last ten years, you can always count on the fact that the prices of clothes and electronic devices have barely risen. The price of a laptop or a pair of jeans is the same as it was in the last millennium
Just look at the commercials from almost 30 years ago. You won’t be surprised by the price index if you see it today:
Source: Trove
In 1993, a computer cost $1,500 to $2,000. You can find computers on the market for similar prices today and do much more.
valuable
The Consumer Price Index highlights how much our money is worth right now. It shows that the price of some basic goods has been steadily falling compared to the quality. The bar in the table below shows the change in the CPI compared to the previous year, and shows three categories that did not see an increase in prices: women’s clothing, computers and home appliances.
Home appliances are interesting. When the above ads were printed, people kept the good bowl in a special glass case. But most of the households formed in the last 20 years did not have “good equipment” that they did not use.
As a result, prices have decreased, as shown in the chart above. But be patient. Enter the last part of the table. Enhance. Wow. What they tell us is important. The prices of these categories do not behave as they have for the past twenty years. His descent is over. Instead, they go up.
Even these categories—where Moore’s Law and the rise of Chinese manufacturing kept us from high prices—have not been able to withstand inflation.
It sends a message. The cost of living is spread. Before, it was a mixture of uphill and downhill, but now it’s almost exclusively uphill. Goods and services, imported and domestic. Fuel, rent, labor and shipping costs mean that almost no category except for higher prices in 2022. in this field it has nothing to do with the market and everything to do with aid).
The RBA is coming
The official rate in Australia has risen significantly this year: from 0.1 percent to 2.85%. But the official interest rate adjusted for inflation is still negative, which means that you can borrow now for a year and repay the loan with less money.
At the next meeting, at the beginning of December, a further increase of 3% is considered more likely, according to market prices, although a pause is not in question. RBA.
The December hike was expected to be higher a few weeks ago, ahead of the latest US inflation figures, which shocked the market by showing a drop in inflation from from 8.2% per year to 7.7% But be careful. This figure is driven by the price of used cars. Australia’s CPI does not include consumer goods.
In addition, the economic cycle in our country runs a little compared to the American one. Inflation rose later and the central bank acted later. It’s a bit like how movie releases used to work— America now sees the show; we can get it in six months.
There is no guarantee that CPI will fall in Australia anytime soon—especially since Treasury and the RBA still believe we are in a recession and inflation is still rising.
December rate hike
US inflation stocks rose on excitement as asset prices were negative. But as the US Fed’s Chris Waller said in a speech in Sydney this week, “It looks like the market is out of it, because of this one CPI report.”
Noise plagues all economic data and such surprising results may be statistical artifacts, not ground truth.
With the RBA’s board having not met in January, it looks like they will have little time to cut rates in December, unless unemployment jumps higher. If they hike, and if the language used to describe their anti-inflation stance is aggressive, expect stocks and the housing market to weaken in response.
House prices show the opposite pattern of clothes and computers. They’ve gone up a lot in price over the past 30 years, but the price increase is suddenly very bad. You can certainly say that the household used the money it received from the goods for the sale of the house. And now that process is reversed.
