Wry & Dry

CPI: down, down, down

Wry & Dry is at a loss to understand the mystery of school fees increasing north of 5% each year and yet inflation is less than half that.

But, like the disappearance of Amelia Earhart [1], it will probably forever remain a mystery.  Actually, the issue is not so much the school fees, but that Australia's inflation rate has fallen again, with the year to September figure on 1.5%, well below the 1.7% expected.

CPI going downThis is the lowest CPI trend (last 4 quarters) since 1999.  And the one impressive feature is that the low figures have occurred when the Australian dollar has weakened substantially.  Low inflation doesn't hold any fears for W&D - it's all expected.  The massive advantages of technology and cheaper commodity prices (especially oil) driving prices down.

But the question on readers' lips surely has to be: "how will the Chief Teller of the RBA respond?  Will interest rates go down?"  Well, he might be better spending his time at Flemington (where the Melbourne Cup horse race is held) on Tuesday at the time when he might otherwise be reading the entrails of dead frogs and chickens.  The reason is that it is now clear that the banking cartel has greater control over consumer lending rates than he does.