Inflation spikes rate cut; super funds warned; $2m parking meter theft

Inflation spikes rate cut; super funds warned; $2m parking meter theft

News in brief

The Labor government, including Prime Minister Anthony Albanese, was last night in talks with the Greens and the Coalition over the passage of new environmental legislation. The ALP had given ground hoping to send the legislation to the Senate today.

 

The gap between the best and worst superannuation funds in terms of servicing members is widening, according to regulators, a situation that has become critical with 2.5 million people expected to retire over the next decade.

 

Brookfield and GIC, the Singaporean sovereign wealth giant, are forming a consortium to bid for National Storage, the real estate business that owns a string of self-storage sites across the country.

 

Harvey Norman has reported solid sales growth while online retailer Temple & Webster has disappointed, continuing the run of mixed results for retailers.

 

A parking inspector and his wife have been arrested on suspicion of embezzling more than 1 million euros, or about $2m, from a small German town's parking meters.

Fear-o-meter

There wasn’t much to like about yesterday’s ABS inflation data. As hinted in the September quarter inflation figures a few weeks ago, price pressures in the economy are on the rise. And they are widespread.

 

Bond markets moved immediately after the 11:30am announcement and traders are pricing in a 23 per cent chance of a rate cut by the middle of next year. It was about double that level ahead of the release of the inflation figures. The Aussie dollar jumped against the greenback to be buying more than 65 US cents.

 

Markets move on the weight of money, so the moves in the bond and currency markets tells you investors aren’t expecting a rate cut any time soon.  

 

The October reading yesterday was the first complete set of monthly figures. They replace the quarterly figures, and market economists expect it will take 12 months or so for the inflation series to be fully accurate.

 

Even so, several economists are now openly saying the next move in interest rates, next year, could be up.

Fear & Greed Q+A today

On a major report by ASIC into public and private markets - including the challenges with private credit:

 

"Private credit, like private markets, when done well, are great. They're great for the market, they're great for investors, they're great for borrowers. The flow of credit is really important in the economy. And at ASIC, we're required to promote confident and informed participation in the economy and financial system. So access to investment and access to credit is really important, whether that's private markets or whether that's in credit or whether that's on the equity side. The problem is private credit at the moment is not done consistently well."

Anyone hoping for another interest rate cut is going to be deeply disappointed this morning, after a jump in inflation wiped out any chance of the Reserve Bank changing monetary policy any time soon. Some market economists now think there’s a strong possibility of a rate rise by the middle of next year. Headline inflation accelerated to 3.8 per cent last month, in annual terms, well above the RBA’s preferred 3-4 per cent target range and above the September reading of 3.6 per cent. Housing, due to higher electricity prices following the end of rebates, and food were the main contributors to inflation. The underlying rate, which takes out those more volatile items, came in at 3.3 per cent, still above the RBA’s target and higher than the previous month. The higher underlying rate demonstrates the widespread nature of price pressures in the economy.

Greed-o-meter

Category	Annual inflation %
Electricity	37.1
Coffee, tea and cocoa	16.4
Lamb and goat	14.6
Jewellery accessories	12.4
Tobacco	11.6
Child care	10.8
Beef and veal	10.5

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While the jump in the cost of electricity can be explained by rebates coming to an end, the monthly inflation data shows there's also been steep price increases across other categories in the last 12 months:

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Source: ABS