Social Trends – Page 2 – Digital Finance Analytics (DFA) Blog

Beyond The Budget BS…

In this show, I want to go beyond the superficial analysis of the recent budget given my in box has been flooded by “analysis: thousands of sources, much missing the point.

And in passing a recognition that the proposal to remove the non compete clause in employee contracts, is one welcome surprise.

But the Spin was in full force through the budget speech this week, with Chalmers claiming it represented the biggest ever” improvement in the budget bottom line since Labor’s May 2022 election, based on the May 22 forecast deficit of $79.8 million. This is the annual loss, not the cumulative total! Now, wall-to-wall deficits projected are projected ahead, so it’s a bit rich for the Treasurer to spin so hard, we all might get giddy.

Actually, the budget has been in deficit 33 of the past 50 years – or two-thirds of the time since Gough Whitlam lost office. And yet in that time our standard of living has improved and we still exist as a sovereign nation. So why all the focus on deficits and surrounding spin?

In summary, according to KPMG we got a forecast underlying cash balance of $42.1 billion in 2025-26; a $4.8 billion improvement on the recent MYEFO estimate. But Nearly $85 billion of “off-budget” spending over the forward estimate period, resulting in cumulative headline cash balance deficits of $236 billion over the four years to 2028-29.

But whether we look at the gas cartel, or tobacco tax, so many issues of importance were missed, indicative a a budget for the election, not reform for the ages….

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Inflation Sticks To The Script: Probably….

We got the next tranche of monthly inflation data from the ABS today, which showed that the Consumer Price Index indicator edged down to 2.4%, which is below economists’ estimate of 2.5%. The headline figure has now been inside the RBA’s 2-3% band for seven straight months.

One important point of distinction with the monthly Indicator is that, while it will include prices for all the items in the CPI basket, not all these prices will be updated each month, so there are large helping of fudge in the numbers, which is why the RBA tends to value the quarterly data more.

That said, even the trimmed mean measure, which smooths out volatile items such as food and energy and is the focus of the RBA’s attention, played ball, decelerating to 2.7% in February from 2.8% in the prior month. The monthly inflation figures are volatile and are unlikely to affect the outlook for interest rates.

The outcome was the equal-lowest rate of underlying inflation since December 2021 and was consistent with the Reserve Bank of Australia’s view that inflationary pressures had cooled considerably over the past year.
The slowdown was driven by a cooling of housing inflation, including rents and power prices, and a decline in fuel costs, the ABS said.

So what is ahead? Well of course we will get the more complete quarterly data in a month’s time, which the RBA is more likely to consider in their rate decision making. But while headline inflation fell to 2.4 per cent last month, it is expected to increase this year as state government electricity bill subsidies expire, even though the federal government has extended the support for power bills another 6 month, and as a result of this use of tax payer funds, the ABS recently revised down the weighting given to power bills in their inflation calculation, which just shows what $9 billion of your money can do!

All this means it is unlikely we will see an April Fool’s Day surprise next Tuesday.

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Gouged By ColesWorth, In Spades?

Last Tuesday I had Andy Schmulow the ACP Candidate for the Senate in NSW in the upcoming election, on my live show. Dr Schmulow left no stone unturned as he methodically called out the power of big business from the Banks, Airlines, Big Consulting Firms and Supermarkets, across Australia who are systematically gouging ordinary households and businesses across the country, protected by the current political system.

Its corruption on a grand scale, which is why our big banks, airlines, gas companies and supermarkets are making super high profits at our expense, and many shareholders by the way in these companies are overseas, so we lose out there too.

And in an interesting happenstance, the ACCC on Friday released their massive 441 report on the Big Supermarkets. It is a thorough examination of the extraordinary number of moving pieces in the grocery sector, and the legitimate concerns of different players at different stages though the value chain.

The ACCC says that Grocery prices in Australia have been increasing rapidly over the last 5 financial years. Most of those increases are attributable to increases in the cost of doing business across the economy, including particularly production costs for suppliers, which has increased supermarkets’ input costs. However, ALDI, Coles and Woolworths have increased their product and EBIT margins during this time, meaning that at least some of the grocery price increases have resulted in additional profits for ALDI, Coles and Woolworths.

They say Coles’ and Woolworths’ apparent ability to increase retail margins for packaged grocery products by more than is necessary to accommodate a wholesale price increase indicates they have – and sometimes exercise – a level of market power in retail markets.

But despite the furore over rising prices, the ACCC noted there’s nothing illegal about businesses making a profit. Woolworths recorded a profit of $739 million in the first half of the current financial year, with Coles reporting a $576 million profit during the same period.

The ACCC says there’s no “silver bullet” to address all of the issues identified in its full report but has recommended a suite of potential legislative and policy reforms to address areas that aren’t working well — particularly when it comes to competition in the industry.

At the heart of the final report of the Australian Competition and Consumer Commission’s supermarket inquiry is a simple truth: the horse has bolted. They suggest things cannot change. But I say, rubbish, time for new broom, to stop the gouging… but that needs real political intent. Cue Andy!

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/