Higher prices on petrol, furniture and cars squeezing budgets   :(
prices furniture electronics
October 27 New Daily.
Australians are being squeezed by rising prices on petrol, furniture and cars as COVID-19 continues to wreak havoc on the global economy.

Data released by the Australian Bureau of Statistics on Wednesday shows that annual underlying inflation rose to 2.1 per cent in the September quarter – the highest level in six years.   :(

Petrol prices broke records and disruptions to international supply chains drove up costs for businesses, making many consumer goods more expensive to buy.   

The sharp rise surprised many economists and has left them arguing over whether the higher prices will stick around, or fade away over the next year.

Workers feeling the pinch
In the meantime, workers are feeling the pinch as COVID slams the brakes on a decades-long trend of increasing purchasing power.
Furniture prices are 14.1 per cent higher today than before the pandemic, increasing 3.8 per cent over the September quarter alone.

Higher demand for home renovations and home office equipment during lockdown has combined with port delays and raw material shortages to push up prices.

Vehicle prices are up 9.5 per cent on pre-COVID levels, due to the global shortage of computer chips.

And petrol prices are up 7.3 per cent over the September quarter alone, as energy shortages in Europe and Asia push up global oil prices.

As for housing, quarterly rents rose 0.2 per cent nationally, with steep rises in Perth (2.8 per cent), Hobart (2.8 per cent) and Darwin (1.8 per cent) offset by falls in Sydney (-0.5 per cent) and Melbourne (-0.3 per cent).

But in good news for household budgets, fruit prices fell 8.3 per cent in the September quarter, thanks to good growing conditions for berries.

Clothing also became 5.5 per cent cheaper due to winter discounting.

And annual headline inflation, which has been unstable due to changes in childcare subsidies, fell from 3.8 per cent to 3 per cent.

Supply chain issues offset mega trend
Economists said the higher prices for consumer electronics, furniture,  appliances and motor vehicles are unusual.

Normally, advances in technology make these goods cheaper each year, allowing people to upgrade to new models without paying more.

It’s the mega trend that’s helped Australians fill their houses with smarter gadgets, bigger TVs and more luxurious lounges over the past two decades.

But BIS Oxford chief economist Sarah Hunter said COVID-19 has offset this trend because demand has surged during lockdown and pandemic health restrictions have made it harder to transport goods.

“These rises partially reverse the decades-long trend of quality improvements and price declines over time,” Dr Hunter said.



Shortages in key inputs like computer chips and timber have worsened the impact, with even the world’s richest man, Elon Musk, feeling the pain.

The ABS highlighted this on Wednesday, noting prices for durable goods have soared in the past 18 months, as the above graph demonstrates.

RBA: Transitory or persistent?
Looking forward, economists are now debating how long these higher prices will stick around, as the global economy rebounds from the pandemic.

Underlying inflation has now risen to the Reserve Bank’s target range almost two years faster than expected, but economists don’t expect the bank to lift interest rates unless these higher prices stick around.

That’s because the RBA has said it will only increase interest rates when inflation has been sustained in its 2 to 3 per cent range for some time.

And the latest inflation is not the type the RBA would prefer to see.

It’s known as cost-push inflation, whereby higher business costs force suppliers to increase prices, lowering consumers’ purchasing power.

The RBA would prefer higher wages to drive inflation by pushing up the demand for goods and services, because this improves living standards.



There are still no signs of higher wages growth and Dr Hunter said the RBA is unlikely to raise rates in response to cost-push inflation because it thinks the supply chain issues causing it will eventually be resolved.

“[The] impact will fade over time as conditions normalise,” she said.

“The board will focus much more on domestic trends, and they will be closely watching the recoveries in Sydney and Melbourne.”

But other economists are less sure higher prices will fade away.

Indeed APAC economist Callam Pickering said “no one really knows” if price rises caused by supply chain issues pushing up business costs will continue over the medium term or begin to subside some time next year.

“These supply chain issues will be with us for six months or so,” he said.

“After that, I would expect it to diminish in some capacity, but we don’t know what will happen to overall demand for goods globally.”

CommSec chief economist Craig James said the COVID shock is still “complicating the inflation outlook” in a note published on Wednesday.

“We won’t get clearer readings for a few more months yet,” he said.

“The debate about whether inflation is just ‘transitory’ or it has more ‘persistent’ qualities will rage for a little longer.”

Hey you, cut those prices.   :( 

whiteknight wrote on Oct 28^th, 2021 at 6:30am:

Hey you, cut those prices.   :(

Better still, cut them taxes

70% OF PETROL IS TAX AND GRUBBERMENT FEES AND CHARGES.

whiteknight wrote on Oct 28^th, 2021 at 6:30am:

Hey you, cut those prices.   :(

....talk is cheap

Energy shortage in the NH affects global prices. Who knew? ::)

whiteknight wrote on Oct 28^th, 2021 at 6:30am:

Hey you, cut those prices.   :(

Seems to be a LOT of profiteering in evidence now that lockdowns are ending.

There can be no other explanation but sheer greed.

In the 70's John Howard as Treasurer decided that Australians weren't paying enough for petrol and introduced a de-facto carbon tax. From that point all Australian-produced crude oil would have to start being sold to local refineries at the same price as it cost to import crude oil from overseas. This was at a time when Australia produced 70% of its domestic needs.

Since deliberately connecting our price to the global price we are at the mercy of the world market.

$1.65/L for fueling my car the other week. Either the world cuts back on using their cars for recreational transport. Or oil producers up the production of oil to export. Unfortunately, the mindset of Australian vehicle owners is to use their cars whenever they feel like it. Especially last night, lapping night, where a dozen drivers drove up and down the streets at least 3 times before I managed to complete my walk of the length of the road, down a footpath.

Oil producers are going to hold off oil production, to make up for the losses suffered last year during the worldwide lockdown. And hoons and other narcissistic vehicle users are just going to eat up petrol supply to keep the petrol suppliers happy.

that faarken little coward John Howard tied our petrol prices to global prices. He should be shot for that alone.

John Smith wrote on Nov 5^th, 2021 at 5:04pm:

that faarken little coward John Howard tied our petrol prices to global prices. He should be shot for that alone.

Howard, I recall, put the GST onto the price of petrol. I believe he removed some of the taxation on petrol in response to the introduction of the GST. So, the amount of tax paid in GST would depend on petrol prices. Without the GST, I would be paying $1.50/L last week. But, I would have had to pay alternate taxation on top. So, petrol might alternatively been cheaper.

Unless Australia produced all of its petroleum needs inside Australia from Australia's oil fields, I see no reason why Australians should not pay international prices for importing oil.

UnSubRocky wrote on Nov 5^th, 2021 at 5:11pm:

Howard, I recall, put the GST onto the price of petrol.

He did more than that

See Ravens post above

Went into shock yesterday, traveling to Maitland for a doctor's thing... checking diesel prices, and $1.70+ was nothing... one place had 98 petrol for 2.00 ...

Pleased I got the diesel now... runs 800+ km on a tank compared to the petrol at 550 or so.

UnSubRocky wrote on Nov 5^th, 2021 at 5:11pm:

John Smith wrote on Nov 5th, 2021 at 5:04pm: that faarken little coward John Howard tied our petrol prices to global prices. He should be shot for that alone. Howard, I recall, put the GST onto the price of petrol. I believe he removed some of the taxation on petrol in response to the introduction of the GST. So, the amount of tax paid in GST would depend on petrol prices. Without the GST, I would be paying $1.50/L last week. But, I would have had to pay alternate taxation on top. So, petrol might alternatively been cheaper. Unless Australia produced all of its petroleum needs inside Australia from Australia's oil fields, I see no reason why Australians should not pay international prices for importing oil.

That's the name of the game - make it so Far Carnarvon confusing that nobody can ever say one way or the other.

Grappler Truth Teller Feller wrote on Nov 5^th, 2021 at 5:54pm:

Went into shock yesterday, traveling to Maitland for a doctor's thing... checking diesel prices, and $1.70+ was nothing... one place had 98 petrol for 2.00 ... Pleased I got the diesel now... runs 800+ km on a tank compared to the petrol at 550 or so.

I just filled up my diesel for $1.52 yesterday

Raven wrote on Oct 29^th, 2021 at 2:08pm:

In the 70's John Howard as Treasurer decided that Australians weren't paying enough for petrol and introduced a de-facto carbon tax. From that point all Australian-produced crude oil would have to start being sold to local refineries at the same price as it cost to import crude oil from overseas. This was at a time when Australia produced 70% of its domestic needs. Since deliberately connecting our price to the global price we are at the mercy of the world market.

That was the name of the game...playing the ideological game that what was good for business was good for everyone... and the little bastard was well paid for doing it.

Globalisation and privatisation are failures absolute.

Wonder if there's any truth to the rumour I heard last week that the reason why petrol prices are now so high is because the oil companies are trying to make up for the losses they've incurred with the downturn in the aviation industry worldwide since the start of the Covid pandemic by now ripping off motorists?

Wouldn't surprise me one bit.

Governments don't/won't care of course since they're raking in all of that lovely fuel tax.

Carl D wrote on Nov 7^th, 2021 at 11:51am:

Wonder if there's any truth to the rumour I heard last week that the reason why petrol prices are now so high is because the oil companies are trying to make up for the losses they've incurred with the downturn in the aviation industry worldwide since the start of the Covid pandemic by now ripping off motorists? Wouldn't surprise me one bit. Governments don't/won't care of course since they're raking in all of that lovely fuel tax.

Fossil fuel prices have spiked partly due to supply problems in the now (back to pre-covid)  rapidly growing economy,  after the end of covid-enforced lockdowns.


But also due to the failure of governments beholden to fossil companies to roll-out renewables fast enough to avoid power black-outs in the UK, EU and China owing to unusual climate related events eg lack of wind  to drive UK's offshore wind farms, and attempts to limit CO2 emissions in China, in the face of  unusually early arrival of cold weather. 

Central banks will of course take exactly the wrong approach to this resulting increase in fuel and related prices, and raise interest rates...which will result in a recession. So far the RBA is resisting bullying by bond vigilantes** who are betting on interest rate rises

**Vigilantes who assume their false 'inflation' narrative will force the RBA to act.

Oil producers are holding off producing as much oil as they did at the start of last year, mainly to enjoy higher profits. But also to prevent another oversupply of oil that oil producers had when there was a lockdown worldwide and few international flights.

If the coronavirus takes hold in some superpower (such as China admitting that the virus is widespread there), we will see demand for oil drop there.