Inflation hits highest rate since 2000

As measured by the consumer price index, inflation was 5.1% higher over the year in the March quarter, above expectations of 4.6% over the year.

This had been driven by lockdowns in China which were causing supply bottlenecks, rising commodity prices as a result of the Russia-Ukraine war, costs of new dwellings and the cost of fuel.

Underlying inflation, the measure used by the Reserve Bank of Australia (RBA), was 3.7% higher over the year, significantly above the RBA’s forecast.

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This shock increase, the highest inflation rise in over 20 years, would prompt the RBA to act sooner than expected.

Shane Oliver, chief economist at AMP Capital, said he expected the RBA would now raise rates next week at its May meeting to bring them up from 0.1% to 0.5%.

“The latest inflation blowout adds significant pressure on the RBA to immediately start raising rates and to do so more aggressively than initially thought likely. Hiking next week will mean moving before it gets to see March quarter wages data due on 18 May which it has previously indicated its inclined to wait for and may annoy the Government as we are in the midst of an election campaign.

“But delaying will only risk an escalation in inflation expectations, with the jobs market so tight it’s only a matter of time before wages growth picks up and various surveys suggest that its already doing so anyway and waiting till June to raise rates will probably have little impact on the election outcome as everyone knows rate hikes are coming anyway.”

Russel Chesler, head of investments and capital markets at VanEck, said: “With such a quick pick up in inflation to 5.1%, which is well above market expectations, there is greater chance that the RBA will increase official interest rates in May even though we are in an election period. If, however, the central bank waits until its June meeting, then I’d expect a bigger increase in rates, most probably 40 basis points.

“I then expect monthly increases bringing the RBA rate to 1.75% to 2.25% by year end, which will place significant upward pressure on mortgage lending rates, which the big banks have already increased considerably.”

J.P. Morgan Asset Management global market strategist, Kerry Craig, said: “With central banks skipping the traditional 25bps rate hikes as they speed towards normalisation of rates, the RBA has scope to make larger moves in the coming months. However, we still expect the RBA to step lightly into the tightening cycle with a 15bps move before adopting the more traditional 25bps increases around quarterly forecasts. The inflation risk presents an upside risk to this view.”

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we can't raise rates there is way too much household debt. RBA stay put. don't raise rates. inflation is high but it will subside in time. supply chains are temporarily blocked. there is no increase in wages.

if you raise rates it will KABOOM. the housing market. kaboom. so please no thank you to raising rates.

be patient rba.

I hope this is a satire take?

I think CFP is serious. Which is really worrying. This is the problem with FASEA. Planners are studying the legal requirements to give out a FSG but a basic level of Economics and or practical life experienced are not valued. A Bachelor of Economics Degree according to FASEA was worth ZIP. A Bachelor of Finance ZIP. Here we have someone claiming to be a "CFP" that is clearly demonstrating the Economic knowledge of a 12 year old.

Calm down Old Bob. Janice CFP is clearly a pot stirrer as evidenced by her many other comments on this site.

Not sure why you would be equating CFP with FASEA? Most people who completed the real CFP qualification had previously completed degrees in fields like economics and finance. They were doubly discriminated against by FASEA in relation to both their degrees and their postgrad CFP qualification.

Janice CFP may well be a grandfathered CFP rather than a real CFP, which perhaps accounts for a large dollop of her ignorance. But grandfathered CFPs didn't get an easy ride from FASEA either. It's only the FPA executive that gives grandfathered CFPs any credence.

"pot stirrer". is an ignorant person's way of saying, "I don't really understand what they are talking about". maybe it just flies over your head.

I have a masters degree and am a real CFP (not that I make a distinction between the two, because older CFPs did whatever course was available at the time, and it was the right thing to do grandfather them, that is what other professions have also done maybe you can read up on that ), with over 20 years of experience. I actually understand both economics and the issues plaguing financial advice very well.

it would serve you well to read and reread my posts clearly, and twice if requires, it critically analyses many relevant issues. you will learn a lot (and I throw in some occasional humor, because I want my posts to be educational and humorous seems to be it is working as you read them, now let's work together & harder on understanding them).

Other professions recognised the highest available course at the time, which was usually set at or above that required for similar occupations, and at or above reasonable community expectations. The FPA deliberately dumbed down the grandfathered CFP to a level well below that available for similar occupations at the time, and well below community expectations at the time. They did it at the behest of their product company masters to sign up as many semi literate product sales reps as possible, who never would have met a reasonable professional standard of education.

Only once those sales reps were hooked in and paying ongoing fees for their lifetime guaranteed CFP "designation" did the FPA raise CFP education standards to what they should have been right from the start.

we'll see about that.

failed fasea and on your way out because you don't have the education requirements?

Ummm.. thought so, OLD bob.

p.s. my understanding of debt and leverage is just fine, you should read up a little more chum. and you'd know how much basic economics I really understand that unfortunately, you do not.

Your debt and leverage might be ok but your Economics understanding is at a level of a 12 year old.

You're really a cantankerous old [email protected]@rd today, aren't you Bobbie?

Go do some of that low fee advice charity work you bang on about and feel good about yourself.

I'm happy charging a fair fee for a fair days work charity here sorry.. You can keep charging those clients $8,000 plus for a review and the 10 days it took you to complete five forms your licensee requires of you. ....oh so much value being add.

$8k?? Why would i discount down to that figure? Ludicrous!

Why would I take 10 days to do 5 forms? Sheesh, if that's your idea of how to work, your "fair day's work" must be slow and extremely boring and unproductive - kinda the same vibe resonating off you, old fella.

Plus I pay staff to do the forms for me, doing admin is only for clueless planners.

BTW just finished a client review this morning, they're very happy and happily paying our well over $8k fee - I mean, on their $6mill portfolio, having made them almost $2mill over the last 18 months you'd expect that wouldn't you?

The market made them money, not you. You helped facilitate it of course, but you can't attribute that gain solely to yourself. You can't benchmark returns against the client being entirely in cash, because it's just not realistic.

Don't delude yourself.

Haha 'market returns' yeah right sport, the market hasn't done anything like that especially since January this year.

Wow, you incorrectly mention 'delusional' but clearly you're either ill informed, out of touch, clueless or all three.

Seeking private off market investments, negotiating buy in deals, liaising with their accountant for optimal tax outcomes and good solid financial strategizing - any idiot can be the run of the mill financial planner leaving the financial fate of clients up to 'the market' and a number of worst ones dart boarding their choices from a platform menu on a wing & prayer & past performances...

BTW soz for the late reply, just got back from Europe.

come back in 12 months and we'll talk, print my comments and keep it. you can refer to me as the oracle afterward.

Think about all the pro-bono work you can do if they raise rates.

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