Very true, and with the attitude of many Aussies being "Oh well, what can you do? I'll just bend over and take it...", it's unlikely to generate any consumer resistance in the marketplace.

I make it my mission to pay as little as possible for things, open accounts with fee free banks, take out credit cards with no fees etc, but until more people actually sit up and take notice, I can't see that this virtual command economy is going to change...

S

True. The explanation I gave was just a general one as far as I understand it (I'm not an economist either - just a humble engineer. ).

Petrol prices have come down considerably - down below $1 a litre in places and are governed by the world oil price (which in itself has come down from the high US$78 to below US$60 a barrel (though up today on
attacks on Nigerian Oil Facilities ). And is it REALLY necessary for all those V6's and V8's being driven?

Incidentally, it's possible to save over 15% / litre just by filling up on the 'cheap' days (ie yesterday fuel was $1.07 - today it's $1.25.

I can't say I've found food expensive in Australia so far (with the exception of certain items such as Bananas but that's due to external factors). Meat is incredibly cheap - one butcher I've driven past sells whole lambs for $4.99/kg!

Australia is currently experiencing a boom and has very low unemployment rates. Left unchecked, inflation could spiral making every $ in your pocket worth less (not to mention your pension fund), your wage demands will increase to compensate, employers will have to cut back on staff, unemployment increases etc etc and round it goes. It can be a vicious circle.

Why do consumers put up with prices being cheaper on some days of the week than others, for no other reason than it being a Wednesday rather than a Thursday? I don't pay more to use public transport on a Thursday...

$15.99 a kilo Coles was selling diced lamb for yesterday. Thankfully I was able to pick up some reduced due to being close to sell by date and get a few dollars knocked off. Haven't found a butchers yet that sells noticeably cheaper than that in inner city Sydney.

True, but inflation in everyday goods is just as bad as inflation in luxury ones - in some cases worse, because everybody needs to buy bread and vegetables.

The last thing was the Banana harvest - Bananas are one of Australia's key inflationary pointers, and when they rocketed in value, inflation moved to follow, prompting an interest rate hike.

The next problem looks like it could be the wheat harvest, which may well be pretty bad due to the drought. That would lead to a massive increase in the cost of bread. Necessities don't come much more basic than that. This could trigger upwards inflationary pressure yet again, stimulating more interest rate hikes.

It's all fun and games...

S

Just run this past me again - Are you saying that if I opened my own petrol station, I couldn't just set the prices according to my economics and then off I go? Would I have to report them to some kind of central comittee of petrol prices?

If I could buy petrol at, say, $0.70 wholesale, I couldn't just sell it at $0.90 and undercut the guy up the road by 35c?

Am I right?

S

All petrol stations have to submit their prices the day before they actually sell at that price.

There was a case earlier this year where an independent actually sold his petrol lower than what he said he was going to do.

If memory serves, he was given a hefty fine.

Thought of the wheat one as soon as the first wheat story emerged. Its getting very predicatable.

The good nutritional grainy stone ground type bread is rarely discounted to the extent of the white bread which has little nutritional value and now linked to several cancers. So with the good bread already just a tad under $4 a loaf I already guess it wont be long till we see $5 a loaf and beyond.

Somebody else mentioned why do consumers put up with it, I would like to know this too, take food up 9.9% this quarter, now when the supermarkets announced their billion dollar profits the justificaton for such ludicrous food prices was petrol costs, petrol costs have since fallen, yet not one food item was reduced.

On petrol stations Woolies and coles have bought up something like 60% of petrol stations in a year, the shopper docket discount is the tactic to push the small guy out of business. I imagine once they have an even bigger share, the discount vouchers will disappear, and the cheaper prices we are seeing at the moment will be gone again.

Nice to think that the 2 big companies own nearly all supermarkets (under several names) will soon control almost all of petrol sales too :scared:

oh dear!!! how does one survive all these price rises with no rise in income!!??
What on earth is going on...are they trying to put people off coming here?
Giving Tradies a hard time in getting licences etc.....

Well my weekly food shop just reached $300! 2 years ago it was about $120. I now have to think twice before just putting stuff in the basket. What bugs me is the weekly pricing structure woolies seem to use. Take cordial for example today it's $4.07 a bottle and has been for 2 weeks, next week it will drop to $3 for a week. The following week it jumps to about $3.80 and then back to $4.07 before starting the cycle all over again. Hence I now stock up in the stuff on a cheap week to last a month. Same goes for the pasta meals, a 50% hike for 2 weeks then a drop back to $1 a bag so they can say it's on special. I understand they hike things up prior to going on sale but the hikes are so ridiculous I don't buy them at all now.

Take petrol, 4c off a litre if you spend more than $30 on food, great until you realise that even with the discount the fuel is still more than the garages that arn't affiliated with the store.

Since being here and as I do the weekly shop the prices have risen so fast you can see it happening week on week, It reminds me of a trip I had to comunist czech years ago where the bread was twice the price at the end of the holiday than it was when I arrived! It will only get worse as the drought tightens and Australia continue with thier anti competitive practices at quarentine and customs in the fake belief they are really protecting us all.

Had better point out,( I dont want vashes mum coming round ) that australias 1.2 million workers on the minimum wage have just got a $27.36 a week pay rise to $511 a week. Or about eight bananas if we are using the governments yardstick to how well off we are.

Thats why we have savings to dip into. When it's gone we can all go home.

Marco I think this is a good explanation if you dont want inflation to rise you have to raise interest rates. Id say it was more a see-saw then a circle!

Amongst a whole swag of stuff, I think interest rises (monetary policy) is supposed to stop spending which increases inflation and overheats the economy - consumer debt is massive. I might say (and I'm probably wrong) that this is more concern.

I would say this is more of a choice thing - costly essentials aren't going to kill me because I spend less on consumerables. Some things you will buy regardless of how expensive they are (up to a point). This is a measure of how 'inelastic' (or is 'elastic'? )something is. What sort of should be happening is that people spend less on crap and more on what they need - the expensive food. Never understood people who are in debt who get in to further debt just because they want a plasma(!)

Of course, you need spending to increase the economy so it's always been a vicious circle(!) of trying to catch the economy at the right time. You don't need a pass in Maths etc to understand it - just the issues and the advice you're given.

I would say this is the concern - remember we've experienced *umpteen* years of growth.

The government sound good remember when they mention 'oh dear' cost of food - nothing we can do because they know people will keep going. They don't like to point the finger at the man in the street and say "stop spending" because they might want him to go back on the plastic sometime in the next cycle. Near where we live, there are areas where peoples' whole lives are based on shopping and derived activities, and don't like being told. So they do it with interest rates.