No,the real inflation dragons wrecking havoc across Australia are dentists,hairdressers and the local kebab shop owner.
Reserve Bank of Australia governor Michele Bullock says “increasingly homegrown” inflation will have an impact on monetary policy.
According to Reserve Bank governor Michele Bullock,,forcing her and the RBA board to push up interest rates.
Speaking to a group of well-coiffured economists on Wednesday night,Bullock - who took over as bank governor in September - said there were three pieces of evidence that showed inflation was being driven by strong domestic demand.
Like a modern-day Sherlock Holmes,she said the first piece of evidence was that inflation is broad-based. It’s not just petrol or electricity or rents that are climbing quickly but most goods and services.
This was supported by her second piece of evidence:the inflationistas at the local hairdresser.
“Hairdressers and dentists,dining out,sporting and other recreational activities - the prices of all these services are rising strongly,” she said.
“This reflects domestic economic conditions and is an indication that aggregate demand is sufficiently greater than aggregate supply to sustain these price increases.”
Bullock’s third piece of evidence was a claim that there is limited spare capacity across the economy which is “most evident in high rates of labour utilisation”.
Those high rates of labour utilisation are most obvious in the that Australia has enjoyed for the past 18 months.
One of the reasons for low unemployment is that inflation - and the Reserve Bank’s interest rate increases - mean people are taking on extra hours so they can make ends meet.
Earlier this week,Bullock told a conference the low jobless rate was one of the country’s great success stories,but in her speech it was used as evidence of inflation pressures that only higher interest rates can address.
While haranguing people who want a short,back and sides or a burger,the governor neglected to mention that inflation for hairdressing services,recreation and culture (which takes in concerts and movies),restaurant meals and takeaway meals have all started falling.
The most recent quarterly inflation result for hairdressers was the lowest in two years while dental service inflation is actually lower than overall inflation.
The,released less than six months ago,noted the institution’s problems with talking to the public,revealing it had received “strong feedback” that the RBA could do more to better communicate with ordinary Australians.
“The public can find it difficult to accurately interpret the RBA’s communication,” it found.
Bullock conceded that point on Wednesday night,saying she did not think the bank had “really hit the mark” on getting its message out to the public in a “digestible way”.
She said that just minutes after arguing a buzz cut or a filling to a lateral incisor was evidence of an economy out of control.
Bullock and the RBA face a tough job as they try to cool the economy. The bank’s standing with the public has taken a battering since Bullock’s predecessor at 0.1 per cent until 2024.
That standing will be even worse if the country is forced by high interest rates to engage in backyard dentistry and kitchen haircuts.
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