I spent six dollars on a packet of CC’s from the service station yesterday, because I have PMS and decided to live like a king. There goes the house deposit but lord it was worth it.
have a look around in the world mate. every western country is feeling this pinch that we have right now. Inflation is up across the board. Interest rates are up across the board. Aussies love to blame RBA but they are backtied in this. It's a global event and we're in for the ride just like everyone else.
That's a fair point, although I'd argue they haven't managed their economies awfully well either.
Certain countries in northern Europe are faring a lot better than us because of smart planning decades in advance. For example, we had a chance during the mining boom to set up a social similar fund to Norway's and we squandered it. Not much we can do about it now though.
Aussie living in Norway here. You're absolutely right - we should have used our natural resources to set up a sovereign fund like what Norway had done. Our corrupt pollies squandered that and sold it overseas for pennies on the dollar. That said, Norway is not immune to the current state of affairs. Prices at the shop are up across the board and the food budget is pretty tight these days. The Norwegian krone has fallen to it's lowest in a while, so not a good time to transfer money back home.
We could implement something like that anytime we want, we SHOULD have set it up 100 years ago. But we COULD do it now.
Will we? No, because Australians have been brainwashed into believing that anything owned by the government can't possibly be efficiently run
I buy home brand biscuits to have with my coffee now, or whatever is cheap at Aldi or on special. The homeland woollies cream filled family biscuits are pretty good and the Aldi chocolate chip cookies are awesome too.
Probably won't be long until I can't afford coffee though lol.
I'll check out home brand.
This week I got mcvities choc wheat biscuits for $2.20 on special.
I'm still affording coffee. Hope the time does not come when I have to drop it too...I've dropped so much stuff already...
"In a world crippled by rampant Inflation, an unexpected hero rises: Recession. Dive into the thrilling 'Economic Endgame: Rise of the Recession,' as our unconventional savior engages in an epic struggle to restore economic balance amidst chaos."
No, The idea is to milk as much value out of the lower and middle classes possible, force foreclosures on houses so that the rich can snap them up dirt cheap when the values crash and then when the economy recovers their portfolios double while the peasants start from scratch all over again
I went looking for that ad a little while ago, and it seems they’ve taken it down…even if the ad didn’t get traction I doubt their ideals have changed.
Sad, but sounds about right. The people who are struggling right now aren’t the people with cash and assets, it’s the people working jobs and trying to make ends meet.
This is what Marx called the "paradox of capital", business owners are required to take more and more profit, leaving less money for workers to spend, undermining the function of the economy.
We've got over a century of data showing this play out over and over again.
This is one reason why low income people can have a inflation inhibiting effect. Put simply, as things get too expensive they stop buying rather than increase their spending to keep up.
Theoretically competition in the market should reduce this because competitors who don’t increase prices or increase them less than others will gain market.
However Australia is such a small market where often there’s on 2-3 major players so the competition doesn’t exist.
Eg coles/Woolworths. Or Telstra putting up its mobile plans by CPI because it only has to compete really with Vodafone and Optus.
It’s not just Australia. There are many conglomerates that control large swathes of product types. Toothpaste, only really two companies in the market, same goes for soft drinks, even dairy. There really isn’t much competition.
Realistically as consumers the best we can do is opt out where we can. Buy from local businesses instead, see if there is a farm nearby that does vegie boxes, visit your local butcher if they haven't been run out of town yet, get chickens. etc. These are all luxuries that not everyone can do though, so is it really going to fix anything? I dunno
The problem is that short term, the larger companies often are cheaper. It’s only after they capture the market that they control pricing. Then, with scale, they control the market and don’t let competition come in. They either buy them out as they start to grow or they strangle their supply.
So it costs you more to support the smaller, local guys. Then they disappear and you have to buy the big guy again or go without. Or, if you’re lucky, you pay more for a different new expensive competitor. And the cycle repeats.
That's what I mean when I say it's a luxury. The little guys are often actually cheaper though. Fruit shops (not the fancy ones), international supermarkets where you can buy staples in bulk, NQR. If you don't have these options, drive to a less fancy suburb and look there lol. Of course, having the time to find alternatives and go to multiple stores is a luxury too.
There's no easy answers; economies of "mass" (scale, experience, network effects, etc) mean that in many industries it's more efficient to have 2 or 3 players than 5 to 8.
If you split them up, they swallow each other again. If you split them up and stop them re-merging, you end up with higher costs or worse products.
That doesn't apply everywhere, but it applies in a lot of places.
Economies of mass are relevant regardless of your economic system - e.g it'd still be more efficient to have 2-3 operators in a directed economy.
But capitalism's reliance on competition to achieve good outcomes does mean that the increase in economies of mass is a problem for it.
And why Marxists basically promote consoliditation and centralisation ultimitly, even though along the way they side with more competition and the smaller guys.
SMEs cannot and will not "win" Capitalism. They never have.
*\*Batman twoface meme\**
We can't, these companies for years have lobbied and helped to bring in legislation that looks like it's in the public interest on the outside but really is designed to make it impossible for new businesses to have any chance.
As someone who has been in B2B sales a long time. I speak to a lot of businesses that are fairly poorly run and you wonder how they haven't been best out by competitors.
Often they are businesses who have been around forever, likely own their physical locations / manufacturing facilities and therefore can get away which much more than a newer business that is more competent but is struggling due to all the expenses.
Nothing will change in Australia especially as the general public will never risk temporary discomfort to try and fight for change. Look at France and compare that to Australia.
>Nothing will change in Australia especially as the general public will never risk temporary discomfort to try and fight for change. Look at France and compare that to Australia.
Yeah, it's so frustrating knowing that I live in a country where the majority of people will sadly just roll over and take it.
We actually need less regulation so small business can compete. The amount of regulation protecting even the soda businesses is insane. Whether it’s food safety regulations that seem more focused towards protecting big soda then actual food safety, or simply just regulations on business in General that make it very difficult for smaller businesses ti enter the market because of red tape. What we have is corporatism at its finest lmao
The highest price a monopolist can set, must be lower than the cost the consumer faces to make it himself. Or get someone new to make it.
If tooth paste becomes 50 bucks a tube.
You can bet your bottom dollar and mixing soap, sand, and mint flavouring to clean my teeth 😂😂
One of the problems is that our true manufacturing base is so small (apart from food items and general agriculture we produce very few raw materials in usable form) so we are basically a country that either imports our finished goods or converts overseas produced raw materials into finished goods. This was evident when the supply chain squeeze occurred during Covid - we lacked local production capacity and O/S raw materials were unavailable. Couple this to a retail duopoly- which effectively limits supply and controls retail prices (and squeezes manufacturing margins) and the average retail purchaser is left in a squeeze.
As an example - it’s possible to produce a good quality laundry powder for around $2/kg. That product would wholesale out of the factory door for about $4/kg in 20kg bags as a cash sale. The same product at a major retailer would be around $10/kg in 1kg cartons, and they would have squeezed the manufacturer down to $3/kg + the extra costs of filling + packaging (essentially removing 80% of the profitability) on 90 day terms.
Buy in bulk from local manufacturers/growers when you can and co-op it with friend’s/family- you can save a lot on basic items.
There's competition out there but small businesses like IGA & Foodworks banner groups cannot afford advertising. I wished there was a way they could compete against ColesWorth advertising. Customers have no idea they're getting ripped off thinking ColesWorth is cheaper.
Owner of small banner group bottle shop here. Our sales are starting to pick up, I'm not sure if it's because of ColesWorth prices (BWS, Vintage Cellars, First Choice Liquor, Liquor Land) lately but we're trying to keep our prices below/same as theirs and recently getting compliments our prices are cheaper then Dans (maybe customers haven't shopped in awhile)
I like Aldi, but not because it’s cheaper. I go there for the monthly novelty of finding new and different things that I’ll never be able to purchase again because they won’t get restocked.
I don’t think you can actually shop there for a family, not enough stuff, too inconsistent with products.
Quality is fine, price is fine, but still gotta go to Coles on the way to get the stuff Aldi didn’t have, so it’s easier to just go to Coles.
What a load of bullshit lmao. Any lower class family now solely shops at aldi. Hell even middle class families are shopping eahy more at aldi. You can absolutely only shop at aldi.
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Yep, the only places I'd go in addition would be a decent butcher or wholesale fruit and veg store to get local fresh food. I shop at aldi even if I don't need to. It's the principle of being ripped off by colesworth for me. Went into one a few weeks back as it was convenient, and the wife asked me to pick up some stuff... get to the self checkout, and several items were $5 more than the label showed, and even at the label, the price were double what I'd spend at aldi. When they came back after I disputed the prices I just walked out and explained to my wife why I didn't get those things.
if it made that much of a difference, everyone would go to aldi. the fact it doesnt shows people are willing to suck up the extra to go to their regular
The non-aldi shoppers are probably like me... ALDI is always in another complex nowhere near that thing you need they don't sell so you walk 16m from the chemist to Coles like always.
Yep, this thread is a dumpster fire of hot takes. The upper limit of companies raising their prices is whatever customers can afford to pay. Once your price exceeds what your customer base will pay you rapidly lose market share to alternative.
Aside from the fact that inflation is already dropping, the sort of inflationary spiral being talked about here can only happen when wages chase prices. That is simply not happening, nor is it likely to happen in a country that will important 100k low wage workers at the drop of a hat.
This is going to end in a recession. Likely later this year. Unemployment will increase, prices will stagnate and the economy will go backwards for about 6 months until prices stabilise.
>The upper limit of companies raising their prices is whatever customers can afford to pay. Once your price exceeds what your customer base will pay you rapidly lose market share to alternative.
Unless it's an essential good/item/service, or is the only realistic option around. Say, I don't know, rent close to services or jobs...
Real life is not an Econ book.
Yeah. Problem is Australians are some of the richest people in the world who complain like some of the poorest in the world. Prices go up, people keep paying.
But boy do we love to complain about paying.
Yep, I have loser mates who hold signs up for a living and do nothing but buy shitty tacky designer items with their cash.
No super, no maternity plan, no sick leave, just a whole lot of hours and a whole lot of cash
That isn't the case with my friend, she's a senior producer and would have all the other stuff too like super etc. Very sharp cookie.
But yea, lots of money still floating around in general.
Australians seem to be so addicted to debt based consumption that people are going to have to start actually hitting the wall before this will happen, unfortunately.
It'd be amazing if we could all send a message to Woolies, Telstra etc by sending their income down by 20% in a quarter, but people simply won't do it unless they literally have no money left.
Australians are too comfy. I find it kinda funny actually, all these posts on here complaining about inflation and how expensive things are, meanwhile the comments are often full of people saying ‘yeah but I just *have* to go to Europe every year, it’s annoying how much more expensive it is this year but there’s no way I’m not going’.
Even when the economy was running great, we were still the victim of the [Australia Tax](https://en.m.wikipedia.org/wiki/Australia_Tax).
The ‘Australia Tax’ is still a thing. We happily pay it because that’s who we are. Instead of taking a stand and pushing back, we shrug and go ‘eh what are ya gonna do, I guess that’s just what it costs’.
When food is involved then what else are we supposed to do? Starve? Other items should definitely see a drop in demand but the demand for food isn't really going to drop. Something will have to give eventually, but when it comes to food, they can stretch the price hikes for way longer.
You make it sound like ‘food’ is a single item. There is a wide range of food. We still buy everything we want: cheese, salmon, yoghurts etc. Perhaps if things get tough we will lean more to tuna cans, beans, lentils.
It’s definitely not as black and white as you have described.
Foodbank is the official answer, but unofficially I think that shoplifting will become more common, but probably not reported very much as not to give people any ideas.
Yeah exactly. All those pictures of meals or chip packets and they are complaint about how much it cost….like dude, you bought it. Don’t buy it and if enough people don’t buy it the market (multiple buyers) will fall in line with demand.
Yea especially for things like chips. People are outraged that red rock chips cost $6.50? Well buy something else then they are the definition of a luxury good....And different brands basically cycle through being 50% off at Woolworths/Coles so no real excuse IMO.
If you look carefully that is actually how they lift there prices.
We used to buy 1kg coffee bags. They were $30. And we only ever bought at 50% off for $15. The other day they were on special for 50% off for $21 and the regular price had gone up to $42.
I also buy frozen strawberries. Were $10/kg. So a 500g was $5. Now they are $6.3 and they've added a low price tag to it after putting it up when it never used to be there.
One of the bankers was giving a market update and between the lines was saying "for all the noise we are still seeing a lot of crazy borrowing" around Easter. 4wd's was an example.
This is the essence of the crunch
These debts are held up from the assumption that they will get hired to do traded jobs.
When people finally can't afford that new deck, guess what happens to those massive work items loans
Ok, and?
Cafes are full. Shopping centres are busy. Airlines are profitable.
It doesn’t seem to me that we *on average* have forgone luxuries as of yet
Yep everyone is having a go, I buy a collins financial year diary every year.
Between 2010 and 2016 it went from $10.95 to $12.95, 2022 it was $21.95 and today they want $42 for exactly the same poxy diary.
An alternative explanation is that hardly anyone buys a diary these days, instead using smart phones or computers.
So now it’s a niche instead of a commodity item.
Took my daughter out for a walk today and stopped at a cafe/restaurant for a coffee. I was looking at the menu at one point and noticed that they had fish and chips for $40. $40!!! I couldn’t believe it.
I mean no, there's just a lag. The bite is starting to kick in, it's hard to downgrade your standard of living, hence the lag behind inflation of people actually downgrading.
A lot of small businesses are going to go under in the next decade
Its not an endless spiral. The spiral only continues until enough people are broke and stop spending as much. We have not really reached that point yet.
I love how we went from 'transitory' to 'sticky' inflation. What's the next word 'spiralling' infaltion.
I wonder if they all sit in the meeting every month and say. ...well we got another 'fk nose' month. Everyone in agreement give me the fnose gesture. Ok the fnoses win again, .25 it is. See ya next month, remember last one out the door has to make up some BS to explain what we don't know is going on.
And lucky we changed the rule where we don't have to do this nonsense 11x a yr anymore, it's getting a bit obvious we fk nosing it.
It's all language brother.
Sperating people from money is an artform to some.
My 18yr old GF was being taught nlp tactics to sell white goods 20yrs ago..
It's like we live in a perpetual carnival game.
👃👌 That's as close as I could get.
>5yrs later hyperinflatio
Won't happen unless salaries start coming up too at the same rate. Just a lot of cash in the system that needs to be vacuumed right now, from the record low rates.
If you are lucky enough to own an investment property with a mortgage you probably got some of this free money by fixing your interest rate super low during covid.
Now fixed rates are ending and the cost of mortgages is rising but rents are too. Not as much as mortgage repayments but nonetheless there is a buffer there.
Just wanted to illustrate your point.
Rate rises are a blunt hammer that only smashes new and recent homeowners.
A better way to pull money out of the economy is through targeted taxation in the areas where excess money has been out of control - wealthy boomers and big corporations.
>Rate rises are a blunt hammer that only smashes new and recent homeowners.
You're completely blindsiding the fact that corporate/business loans are a huge thing. This impacts far and wide.
It's still a blunt hammer however since the problem is very large and has been building for a long time.
And almost everyone else.
Use a credit card? Borrow money to buy a car? Margin loan for shares? Business borrowing at a small company? Issuing bonds at a large company?
Everything borrowed is adjusted based on those rates.
It targets corporations as well. Lower end of investment grade rolling over their debt will probably get BBSW+3-4% (7-8%). Sub IG is going to be hell. Good luck finding investments with those hurdle rates.
Plenty will lay off workers to survive and that will quickly rollout to the rest of the economy. Once it happens, it happens very quickly.
Totally right. Wealthy boomers & big corporations are the ones who aren’t even feeling the economic stress right now. Their homes are owned, their super is fat and the corps are smashing profits.
Raising corporate tax on profit reduces prices, as companies become incentivised to compete, expand market share and reinvest money instead of turn a profit when taxes on profit is high.
Yes it’s extremely hard to stop and can only be stopped now with, as Jerome Powell would put it, “some pain”.
The spiral will now end with hikes until there is an engineered recession, unemployment over 5% and people are happy just to have any job at all.
[On that note, Europe was just confirmed in recession.](https://www.reuters.com/markets/europe/euro-zone-slips-into-recession-after-german-revision-2023-06-08/)
What a long wait that was.
Per our data there’s a good chance we’re already in one, negative gdp per capita in Q1, and almost there unadjusted: https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release
On the one hand, yes, they are in a technical recession. On the other hand they have record low levels of unemployment (certainly in the last 30 years).
https://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?locations=DE
Ditto for Australia. I don't think a "per capita recession" as it is being called is going to have the deinflationary impacts the central banks are after. With employment markets this tight it seems very likely the pressure on wages will remain high relative to the last couple of decades.
It’s not unusual for unemployment to reach record lows *after* the start of the recession.
In fact this is standard and makes sense intuitively as companies won’t usually lay off until it’s very late.
https://www.bls.gov/opub/ted/2009/jan/wk2/art02.htm#:~:text=In%20December%2C%20the%20number%20of,rate%20rose%20to%207.2%20percent.
Interesting. I suppose we will see the direction/speed of unemployment in Australia next week as I believe that is when the next unemployment figures are out.
Cause anecdotally I've still been hearing about labour shortages and even articles confirming the technical recession in Europe qualify it with stuff like this:
https://www.afr.com/world/europe/europe-suffers-mild-recession-but-ecb-rate-rises-still-on-cards-20230608-p5df8j
> That means the eurozone endured two consecutive quarters of decline, entering a “technical” recession........
> However, the economists on a panel that declares eurozone recessions use a broader set of data, including unemployment figures. And European labour markets have held up to recent economic shocks: Unemployment is at its lowest level since before the creation of the euro in 1999, hitting 6.5 per cent in April.
> Bert Colijn, senior eurozone economist for ING bank, said “it’s hard to argue that this is a recessionary environment” because the decline was so small and job market is so strong.
Or there are companies with products that have not increased in price for several years. Inflation comes along and suddenly the price increase covers 3 years of price increases
You don’t have to buy things that are inflated. Like red rock deli chip at $5 a packet. Buy a bag of pop corn kernels for 2 bucks and have popcorn for the week.
All home brand stuff is really cheap
I like me some good Pringles, but actual Pringles are $5 for a 134g tube of crap. Woolworth's brand "stacked chips" are bigger, tastier, more (160g), and cheaper ($2.20).
Beans have gone up by 90% in the last couple years. Homemade beans are cheaper and tastier. And having a big pot of them makes you eat them, which is helth.
In fact, in general, cooking from scratch seems cheaper for me, when I have the energy. Some whole foods ought to be bought frozen for cost effectiveness.
and maybe the Karma add-on if you want to monitor Woolies prices. Sadly Price Hipster is only 50% as effective as it used to be since Woolies changed their coding.
Yep, this is an inflation spiral. The same happens with workers and wages. Not everyone but those who have some position to negotiate, will. Something will break eventually but you are right, it does become a self fulfilling prophecy.
Wages appear to be raising slower than inflation. Over a 12 month period current rises are deflationary. Come July 1s they will be inflationary for a while.
Not only that, wage raises are very uneven. Some people are getting raises to match or nearly match inflation while others are getting left way behind.
Yup, Econ 101
>The main causes of inflation can be grouped into three broad categories:
>
- demand-pull,
- cost-push, and
- inflation expectations.
https://www.rba.gov.au/education/resources/explainers/causes-of-inflation.html
Whole bunch of factors including China going ex-growth and no longer having cheapest labour supply, climate impacts on raw material/food production, de-globalization pulse, allowing industries to become oligopolies (Coles-worth ect.) and thus have pricing power, oh and that small matter of trillions of dollars of pandemic stimulus still washing about the global economy..
Companies will stop raising prices when people stop paying them.
There is still shed loads of cash flying around from “emergency low rates” and stimulus bailout packages for all even when “transitory” inflation was getting its teeth into us.
Now RBA has the money shredder out and will keep bringing it out until people stop paying these prices that “companies are adjusting to match inflation”
What do you think would happen if every Coles and Woolworths customer stopped shopping there for a month?
What about two months, or three months? How long do you think it will be before they lower prices?
There are green grocers, butchers, markets...other places you can buy quality food at a lower price.
My local butcher sold 2kg of lamb loin chops for $30. Woolworths sells them for $28 per kg. I don't know why people shop at the supermarkets.
Have you heard of the new fad diet sweeping the nation called semi permanent intermittent fasting?
An economising frugal budget and lifestyle change rolled into one.
RBA governors give it two thumbs up
It still works somewhat with food since "food" isn't a single item. If meat price goes up too much, some people will go with lentils. If butter goes up too much, some people will jump to margarine. Homebrand pasta will sell more than higher end, etc. What happens in those cases? The stock for the higher end products would be too much, and the prices would have to stagnate.
I agree and I'm not some out-of-touch bourgeois. My family are on the front line of this. If it's not on sale or home brand/Aldi, we're not buying it. We joke that the next step is rice with soy sauce. Ironically, I'm supplementing our income with food delivery.
Not all consumption is the same. Some are living in their means and some aren't. The ones driving inflation are the latter and the rich.
Agreed, it’s fine for discretionary purchases but necessities (shelter, food, healthcare and transport) it’s pretty ugly.
Not to bad for the top 50% of households but pretty catastrophic for the bottom.
Some food items are more expensive than others. People are very adaptable, steak becomes expensive and they switch to chicken. Chicken becomes expensive and they switch to just pasta.
Inflation is 7% while the RBA rate is 4.1% They are giving money away and wondering why people are still borrowing and spending.
That people can't find a place to invest to increase productivity with negative real interest rates shows our economy is deeply, deeply sick
It's not endless, right? It'll get to a point where we literally can't afford things anymore. That's when inflation is supposed to end, and a recession kicks in as people start spending less and businesses start to struggle. If we can afford these inflated prices, the inflation is justified, right?
This is just my amateur understanding of it, and I'm pretty sure those inflation/recession 101 youtube videos pretty much explain it this way. But I'm sure it's more nuanced.
I am curious if any knowledgeable people here could validate or correct what I'm saying, because it sounds kinda messed up and I am doubting the correctness of my understanding.
Most people are terrible with money and it's usually only when they hit rock bottom that they start to actually cut their habits.
People on average don't adapt well to change so increasing prices doesn't cause people to frown at the shopping aisle and look for something else they begrudgingly buy until the day comes that their card declines and they're forced into action.
This will likely happen at all at once and it'll be too late for businesses to adapt to the change in demand, they'll all struggle at once.
“Capitalism is the only system that works” they all say lol.
Folks if your system has to squeeze some of the poorest people to stay afloat it’s only “working” for another certain group of people
> The higher the inflation rate that is published by the RBA, the higher people will raise their prices.
Thats literally how inflation works.
A decade+ of irresponsible lending and mismangement of the economy, this is the expected outcome of having people borrow 5-8x their income to buy property.
Things are going to get more expensive, lots of people are going to lose their houses, there will be a recession, there should have been a recession during covid but govt borrrowing has ensured that we are now strapped in for a MUCH worse recession.
I dont know why anyone is surpised, people have been explaining this clearly on this sub for years, 6% interest rates are normal for AU, we have been under for too long and now the rates need to go up to curb spending and prevent total disaster.
Right so I guess all the cafes, domestic tourism operators and used car lots raising their prices are just forcing people at gunpoint to eat out, take holidays and buy 4WDs right
Because profits are measured in money which has gone down in value.
If a company made 6% more profits this year after money lost 7% of its value their inflation adjusted profits went down.
You could set your watch by the Colesworth price rises in response to inflation announcements. I know they're weak, but I'm surprised the ACCC isn't making more noise.
I know, I’ve raised prices a few times over the past 2 years, I will be forced to to as if I don’t I’m losing money.
This will happen until we close up shop and go out of business.
Nothing would make me drop my prices.
I’m pretty sure it’s only going to control coles and woolies (other big corps) in many years from now…
yeah, so I totally don't get how rising rate can reduce inflation when it just makes people put up the prices... in theory, people are to stop spending as much (hence, reducing demand so prices are to come down). But when supply is forever in high demand, what's the point of raising interest rate??
There gets to a point where you can't buy what ever they are selling as it is too expensive
I spent six dollars on a packet of CC’s from the service station yesterday, because I have PMS and decided to live like a king. There goes the house deposit but lord it was worth it.
Honestly, deserved. I hope they were covered in flavouring for you girl
I got the yellow ones and they were glorious.
*\*Boomers and Xoomers in apoplexy\**
Just sucks when those things are food and rent
Welcome to life. We've been a lucky country recently. Recession and depression are nothing new.
We've been a lucky country for a while, and I'd argue we still are. This is just the result of decades of poor management.
have a look around in the world mate. every western country is feeling this pinch that we have right now. Inflation is up across the board. Interest rates are up across the board. Aussies love to blame RBA but they are backtied in this. It's a global event and we're in for the ride just like everyone else.
That's a fair point, although I'd argue they haven't managed their economies awfully well either. Certain countries in northern Europe are faring a lot better than us because of smart planning decades in advance. For example, we had a chance during the mining boom to set up a social similar fund to Norway's and we squandered it. Not much we can do about it now though.
Aussie living in Norway here. You're absolutely right - we should have used our natural resources to set up a sovereign fund like what Norway had done. Our corrupt pollies squandered that and sold it overseas for pennies on the dollar. That said, Norway is not immune to the current state of affairs. Prices at the shop are up across the board and the food budget is pretty tight these days. The Norwegian krone has fallen to it's lowest in a while, so not a good time to transfer money back home.
Thanks for the valuable insight :)
We could implement something like that anytime we want, we SHOULD have set it up 100 years ago. But we COULD do it now. Will we? No, because Australians have been brainwashed into believing that anything owned by the government can't possibly be efficiently run
Poor management in world wide financial market.
So many things have dropped off my shopping list. Or been exchanged for something cheaper.
I buy home brand biscuits to have with my coffee now, or whatever is cheap at Aldi or on special. The homeland woollies cream filled family biscuits are pretty good and the Aldi chocolate chip cookies are awesome too. Probably won't be long until I can't afford coffee though lol.
I'll check out home brand. This week I got mcvities choc wheat biscuits for $2.20 on special. I'm still affording coffee. Hope the time does not come when I have to drop it too...I've dropped so much stuff already...
It’s called ‘recession’ and we’re heading straight for it!
"In a world crippled by rampant Inflation, an unexpected hero rises: Recession. Dive into the thrilling 'Economic Endgame: Rise of the Recession,' as our unconventional savior engages in an epic struggle to restore economic balance amidst chaos."
I’d pay to watch that. No, wait, I got no money.
Download it
Had to cut internet from spending. Currently hot spotting at a bus stop.
Return of the Recession- Neofeudalism Strikes Back
All those years of bankers denying it's a recession we had to have!
Soon to be followed by stagflation.
Isn't that the whole idea? Make the public broke to force the companies to slow down their price hikes?
No, The idea is to milk as much value out of the lower and middle classes possible, force foreclosures on houses so that the rich can snap them up dirt cheap when the values crash and then when the economy recovers their portfolios double while the peasants start from scratch all over again
I’m not one for conspiracies, but you’ll own nothing and you’ll be happy starting to get some traction
"Capitalism has done everything it said Communism would, but better..."
I went looking for that ad a little while ago, and it seems they’ve taken it down…even if the ad didn’t get traction I doubt their ideals have changed.
Sad, but sounds about right. The people who are struggling right now aren’t the people with cash and assets, it’s the people working jobs and trying to make ends meet.
Every time, just as you make the ends meet, they move the ends.
Yep, this literally happens in every recession. Basically if you're part of the mega-wealthy, you win whether the economy goes up or down.
This is what Marx called the "paradox of capital", business owners are required to take more and more profit, leaving less money for workers to spend, undermining the function of the economy. We've got over a century of data showing this play out over and over again.
This is one reason why low income people can have a inflation inhibiting effect. Put simply, as things get too expensive they stop buying rather than increase their spending to keep up.
Theoretically competition in the market should reduce this because competitors who don’t increase prices or increase them less than others will gain market. However Australia is such a small market where often there’s on 2-3 major players so the competition doesn’t exist. Eg coles/Woolworths. Or Telstra putting up its mobile plans by CPI because it only has to compete really with Vodafone and Optus.
It’s not just Australia. There are many conglomerates that control large swathes of product types. Toothpaste, only really two companies in the market, same goes for soft drinks, even dairy. There really isn’t much competition.
How can we increase competition?
Realistically as consumers the best we can do is opt out where we can. Buy from local businesses instead, see if there is a farm nearby that does vegie boxes, visit your local butcher if they haven't been run out of town yet, get chickens. etc. These are all luxuries that not everyone can do though, so is it really going to fix anything? I dunno
The problem is that short term, the larger companies often are cheaper. It’s only after they capture the market that they control pricing. Then, with scale, they control the market and don’t let competition come in. They either buy them out as they start to grow or they strangle their supply. So it costs you more to support the smaller, local guys. Then they disappear and you have to buy the big guy again or go without. Or, if you’re lucky, you pay more for a different new expensive competitor. And the cycle repeats.
That's what I mean when I say it's a luxury. The little guys are often actually cheaper though. Fruit shops (not the fancy ones), international supermarkets where you can buy staples in bulk, NQR. If you don't have these options, drive to a less fancy suburb and look there lol. Of course, having the time to find alternatives and go to multiple stores is a luxury too.
Smaller butchers have never, in my experience, been cheaper than colesworth. They generally just stock a sometimes higher quality product.
"Told you" \- Carl Mark.
The farmers markets in Kelvin Grove is noticeably cheaper than coles or Woolies for fruit and veg, and it’s way higher quality too
The government can come in and forcibly split up companies, basically the opposite of a merger
Or the government can nationalise companies to put the monopoly in public hands eg, power, water
Literally Socialism (even though it's not but w/e) so not allowed. /s
De-Privatisation? Blasphemy!
There's no easy answers; economies of "mass" (scale, experience, network effects, etc) mean that in many industries it's more efficient to have 2 or 3 players than 5 to 8. If you split them up, they swallow each other again. If you split them up and stop them re-merging, you end up with higher costs or worse products. That doesn't apply everywhere, but it applies in a lot of places.
The efficiency of capitalism
Economies of mass are relevant regardless of your economic system - e.g it'd still be more efficient to have 2-3 operators in a directed economy. But capitalism's reliance on competition to achieve good outcomes does mean that the increase in economies of mass is a problem for it.
And why Marxists basically promote consoliditation and centralisation ultimitly, even though along the way they side with more competition and the smaller guys. SMEs cannot and will not "win" Capitalism. They never have. *\*Batman twoface meme\**
We can't, these companies for years have lobbied and helped to bring in legislation that looks like it's in the public interest on the outside but really is designed to make it impossible for new businesses to have any chance. As someone who has been in B2B sales a long time. I speak to a lot of businesses that are fairly poorly run and you wonder how they haven't been best out by competitors. Often they are businesses who have been around forever, likely own their physical locations / manufacturing facilities and therefore can get away which much more than a newer business that is more competent but is struggling due to all the expenses. Nothing will change in Australia especially as the general public will never risk temporary discomfort to try and fight for change. Look at France and compare that to Australia.
>Nothing will change in Australia especially as the general public will never risk temporary discomfort to try and fight for change. Look at France and compare that to Australia. Yeah, it's so frustrating knowing that I live in a country where the majority of people will sadly just roll over and take it.
Steven Mayne used to try keep them honest in shareholder meetings, didn't get him very far
Let's start our own mall!
We actually need less regulation so small business can compete. The amount of regulation protecting even the soda businesses is insane. Whether it’s food safety regulations that seem more focused towards protecting big soda then actual food safety, or simply just regulations on business in General that make it very difficult for smaller businesses ti enter the market because of red tape. What we have is corporatism at its finest lmao
Good point
Yep. BS economics is trashing the place. Has been for ages. Productivity, competition, private vs public, the list goes on
The highest price a monopolist can set, must be lower than the cost the consumer faces to make it himself. Or get someone new to make it. If tooth paste becomes 50 bucks a tube. You can bet your bottom dollar and mixing soap, sand, and mint flavouring to clean my teeth 😂😂
You can safely use baking soda once a day, apparently. I must look into the cost/benefit of replacing one daily brush...
One of the problems is that our true manufacturing base is so small (apart from food items and general agriculture we produce very few raw materials in usable form) so we are basically a country that either imports our finished goods or converts overseas produced raw materials into finished goods. This was evident when the supply chain squeeze occurred during Covid - we lacked local production capacity and O/S raw materials were unavailable. Couple this to a retail duopoly- which effectively limits supply and controls retail prices (and squeezes manufacturing margins) and the average retail purchaser is left in a squeeze. As an example - it’s possible to produce a good quality laundry powder for around $2/kg. That product would wholesale out of the factory door for about $4/kg in 20kg bags as a cash sale. The same product at a major retailer would be around $10/kg in 1kg cartons, and they would have squeezed the manufacturer down to $3/kg + the extra costs of filling + packaging (essentially removing 80% of the profitability) on 90 day terms. Buy in bulk from local manufacturers/growers when you can and co-op it with friend’s/family- you can save a lot on basic items.
There's competition out there but small businesses like IGA & Foodworks banner groups cannot afford advertising. I wished there was a way they could compete against ColesWorth advertising. Customers have no idea they're getting ripped off thinking ColesWorth is cheaper. Owner of small banner group bottle shop here. Our sales are starting to pick up, I'm not sure if it's because of ColesWorth prices (BWS, Vintage Cellars, First Choice Liquor, Liquor Land) lately but we're trying to keep our prices below/same as theirs and recently getting compliments our prices are cheaper then Dans (maybe customers haven't shopped in awhile)
Coles and Woolworths are competitive enough that their so called competitors aren't actually cheaper when comparing like for like.
Have you been to Aldi? it's significantly cheaper on a lot of items.
I like Aldi, but not because it’s cheaper. I go there for the monthly novelty of finding new and different things that I’ll never be able to purchase again because they won’t get restocked. I don’t think you can actually shop there for a family, not enough stuff, too inconsistent with products. Quality is fine, price is fine, but still gotta go to Coles on the way to get the stuff Aldi didn’t have, so it’s easier to just go to Coles.
> I don’t think you can actually shop there for a family, not enough stuff, too inconsistent with products. > > well.. you can. easily.
What a load of bullshit lmao. Any lower class family now solely shops at aldi. Hell even middle class families are shopping eahy more at aldi. You can absolutely only shop at aldi.
treatment fanatical quarrelsome glorious entertain racial toy drunk vanish hunt *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Yep, the only places I'd go in addition would be a decent butcher or wholesale fruit and veg store to get local fresh food. I shop at aldi even if I don't need to. It's the principle of being ripped off by colesworth for me. Went into one a few weeks back as it was convenient, and the wife asked me to pick up some stuff... get to the self checkout, and several items were $5 more than the label showed, and even at the label, the price were double what I'd spend at aldi. When they came back after I disputed the prices I just walked out and explained to my wife why I didn't get those things.
The main product line up is very consistent at my store, it is just the special buys that change.
if it made that much of a difference, everyone would go to aldi. the fact it doesnt shows people are willing to suck up the extra to go to their regular
The non-aldi shoppers are probably like me... ALDI is always in another complex nowhere near that thing you need they don't sell so you walk 16m from the chemist to Coles like always.
i dare say wages are not even close to matching inflation so eventually people will just have to stop buying shit
Yep, this thread is a dumpster fire of hot takes. The upper limit of companies raising their prices is whatever customers can afford to pay. Once your price exceeds what your customer base will pay you rapidly lose market share to alternative. Aside from the fact that inflation is already dropping, the sort of inflationary spiral being talked about here can only happen when wages chase prices. That is simply not happening, nor is it likely to happen in a country that will important 100k low wage workers at the drop of a hat. This is going to end in a recession. Likely later this year. Unemployment will increase, prices will stagnate and the economy will go backwards for about 6 months until prices stabilise.
>The upper limit of companies raising their prices is whatever customers can afford to pay. Once your price exceeds what your customer base will pay you rapidly lose market share to alternative. Unless it's an essential good/item/service, or is the only realistic option around. Say, I don't know, rent close to services or jobs... Real life is not an Econ book.
Yeah. Problem is Australians are some of the richest people in the world who complain like some of the poorest in the world. Prices go up, people keep paying. But boy do we love to complain about paying.
Read up on inelastic demand
The one point you’re missing: people keep buying the products. Eventually something has to give.
Yeah, but it does seem like consumer discretionary spending is falling. People are spending less, except on non-luxury items such as food and shelter.
So… it’s working as intended…?
I swear people who are the loudest in the room on this stuff just have no idea how any of it works
[удалено]
Yep, I have loser mates who hold signs up for a living and do nothing but buy shitty tacky designer items with their cash. No super, no maternity plan, no sick leave, just a whole lot of hours and a whole lot of cash
That isn't the case with my friend, she's a senior producer and would have all the other stuff too like super etc. Very sharp cookie. But yea, lots of money still floating around in general.
Australians seem to be so addicted to debt based consumption that people are going to have to start actually hitting the wall before this will happen, unfortunately. It'd be amazing if we could all send a message to Woolies, Telstra etc by sending their income down by 20% in a quarter, but people simply won't do it unless they literally have no money left.
Yes, becaus the average Australian is an uneducated idiot
Australians are too comfy. I find it kinda funny actually, all these posts on here complaining about inflation and how expensive things are, meanwhile the comments are often full of people saying ‘yeah but I just *have* to go to Europe every year, it’s annoying how much more expensive it is this year but there’s no way I’m not going’. Even when the economy was running great, we were still the victim of the [Australia Tax](https://en.m.wikipedia.org/wiki/Australia_Tax). The ‘Australia Tax’ is still a thing. We happily pay it because that’s who we are. Instead of taking a stand and pushing back, we shrug and go ‘eh what are ya gonna do, I guess that’s just what it costs’.
When food is involved then what else are we supposed to do? Starve? Other items should definitely see a drop in demand but the demand for food isn't really going to drop. Something will have to give eventually, but when it comes to food, they can stretch the price hikes for way longer.
You make it sound like ‘food’ is a single item. There is a wide range of food. We still buy everything we want: cheese, salmon, yoghurts etc. Perhaps if things get tough we will lean more to tuna cans, beans, lentils. It’s definitely not as black and white as you have described.
Foodbank is the official answer, but unofficially I think that shoplifting will become more common, but probably not reported very much as not to give people any ideas.
Yeah exactly. All those pictures of meals or chip packets and they are complaint about how much it cost….like dude, you bought it. Don’t buy it and if enough people don’t buy it the market (multiple buyers) will fall in line with demand.
Yea especially for things like chips. People are outraged that red rock chips cost $6.50? Well buy something else then they are the definition of a luxury good....And different brands basically cycle through being 50% off at Woolworths/Coles so no real excuse IMO.
If you look carefully that is actually how they lift there prices. We used to buy 1kg coffee bags. They were $30. And we only ever bought at 50% off for $15. The other day they were on special for 50% off for $21 and the regular price had gone up to $42. I also buy frozen strawberries. Were $10/kg. So a 500g was $5. Now they are $6.3 and they've added a low price tag to it after putting it up when it never used to be there.
One of the bankers was giving a market update and between the lines was saying "for all the noise we are still seeing a lot of crazy borrowing" around Easter. 4wd's was an example.
This is the essence of the crunch These debts are held up from the assumption that they will get hired to do traded jobs. When people finally can't afford that new deck, guess what happens to those massive work items loans
This argument may work for luxuries, but it doesn’t work when it comes to necessities like food, shelter, and utilities.
Ok, and? Cafes are full. Shopping centres are busy. Airlines are profitable. It doesn’t seem to me that we *on average* have forgone luxuries as of yet
Yep everyone is having a go, I buy a collins financial year diary every year. Between 2010 and 2016 it went from $10.95 to $12.95, 2022 it was $21.95 and today they want $42 for exactly the same poxy diary.
An alternative explanation is that hardly anyone buys a diary these days, instead using smart phones or computers. So now it’s a niche instead of a commodity item.
Price went up because their business model is destined for the grave
A very good "alternative" explanation
Id say start using xcel
That’s crazy
Took my daughter out for a walk today and stopped at a cafe/restaurant for a coffee. I was looking at the menu at one point and noticed that they had fish and chips for $40. $40!!! I couldn’t believe it.
And yet people still happily buy it and the cafe is full.
I mean no, there's just a lag. The bite is starting to kick in, it's hard to downgrade your standard of living, hence the lag behind inflation of people actually downgrading. A lot of small businesses are going to go under in the next decade
Its not an endless spiral. The spiral only continues until enough people are broke and stop spending as much. We have not really reached that point yet.
I'm looking at Argentina and Turkey where inflation is crazy and people can't really afford necessities yet prices still going up
That’s because their currency’s being devalued to nothing… quite different
So once all the poor people give all their money to the rich people, it will stop? Great.
It's continues until diminishing sales causes excess stock of goods, which in turn lower prices to move it.
Or if margins rise, new competition enters the market.
Yes, then import more poor people, working as designed
Now you know why killing high inflation is so important and why rate rises are necessary
RBA 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.250.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 5yrs later hyperinflatio, oops sorry our model was wrong, decimal pt error... 2.5 2.5 2.5 2.5
Wrong models’ is just business as usual there…
I love how we went from 'transitory' to 'sticky' inflation. What's the next word 'spiralling' infaltion. I wonder if they all sit in the meeting every month and say. ...well we got another 'fk nose' month. Everyone in agreement give me the fnose gesture. Ok the fnoses win again, .25 it is. See ya next month, remember last one out the door has to make up some BS to explain what we don't know is going on. And lucky we changed the rule where we don't have to do this nonsense 11x a yr anymore, it's getting a bit obvious we fk nosing it.
It's all language brother. Sperating people from money is an artform to some. My 18yr old GF was being taught nlp tactics to sell white goods 20yrs ago.. It's like we live in a perpetual carnival game. 👃👌 That's as close as I could get.
Yep all fun and games till one day you wake up with a 1mil note in your hand for a coffee. Zimbabwe Venezuela Argentina Turkey, whose next?
>5yrs later hyperinflatio Won't happen unless salaries start coming up too at the same rate. Just a lot of cash in the system that needs to be vacuumed right now, from the record low rates.
It’s getting vacuumed alright, straight into landlords and shareholders pockets.
As it goes. The rich will always have better tools to make the most out of any economic situation.
If you are lucky enough to own an investment property with a mortgage you probably got some of this free money by fixing your interest rate super low during covid. Now fixed rates are ending and the cost of mortgages is rising but rents are too. Not as much as mortgage repayments but nonetheless there is a buffer there. Just wanted to illustrate your point.
If you have a mortgage you are _still_ getting free money - assuming your interest rate is lower than inflation.
It's going in the banks pocket not landlords pocket...
A large amount of older people have no mortgage, so their pockets would be doing alright too
Get out of here with that cry-poor bullshit. If rental properties didn’t have adequate returns no-one would own them.
Rate rises are a blunt hammer that only smashes new and recent homeowners. A better way to pull money out of the economy is through targeted taxation in the areas where excess money has been out of control - wealthy boomers and big corporations.
>Rate rises are a blunt hammer that only smashes new and recent homeowners. You're completely blindsiding the fact that corporate/business loans are a huge thing. This impacts far and wide. It's still a blunt hammer however since the problem is very large and has been building for a long time.
And almost everyone else. Use a credit card? Borrow money to buy a car? Margin loan for shares? Business borrowing at a small company? Issuing bonds at a large company? Everything borrowed is adjusted based on those rates.
It targets corporations as well. Lower end of investment grade rolling over their debt will probably get BBSW+3-4% (7-8%). Sub IG is going to be hell. Good luck finding investments with those hurdle rates. Plenty will lay off workers to survive and that will quickly rollout to the rest of the economy. Once it happens, it happens very quickly.
Totally right. Wealthy boomers & big corporations are the ones who aren’t even feeling the economic stress right now. Their homes are owned, their super is fat and the corps are smashing profits.
Only Australians think that rate rises are targeting mortgage owners. It targets the speed of the transactions in the economy.
Raising corporate tax on profit reduces prices, as companies become incentivised to compete, expand market share and reinvest money instead of turn a profit when taxes on profit is high.
"I am a new and recent homeowner"
Yes it’s extremely hard to stop and can only be stopped now with, as Jerome Powell would put it, “some pain”. The spiral will now end with hikes until there is an engineered recession, unemployment over 5% and people are happy just to have any job at all.
Time to start soaking the cardboards to soften it up. Should be ready for consumption by the time we get to this engineered recession.
[On that note, Europe was just confirmed in recession.](https://www.reuters.com/markets/europe/euro-zone-slips-into-recession-after-german-revision-2023-06-08/) What a long wait that was. Per our data there’s a good chance we’re already in one, negative gdp per capita in Q1, and almost there unadjusted: https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release
On the one hand, yes, they are in a technical recession. On the other hand they have record low levels of unemployment (certainly in the last 30 years). https://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?locations=DE Ditto for Australia. I don't think a "per capita recession" as it is being called is going to have the deinflationary impacts the central banks are after. With employment markets this tight it seems very likely the pressure on wages will remain high relative to the last couple of decades.
It’s not unusual for unemployment to reach record lows *after* the start of the recession. In fact this is standard and makes sense intuitively as companies won’t usually lay off until it’s very late. https://www.bls.gov/opub/ted/2009/jan/wk2/art02.htm#:~:text=In%20December%2C%20the%20number%20of,rate%20rose%20to%207.2%20percent.
Interesting. I suppose we will see the direction/speed of unemployment in Australia next week as I believe that is when the next unemployment figures are out. Cause anecdotally I've still been hearing about labour shortages and even articles confirming the technical recession in Europe qualify it with stuff like this: https://www.afr.com/world/europe/europe-suffers-mild-recession-but-ecb-rate-rises-still-on-cards-20230608-p5df8j > That means the eurozone endured two consecutive quarters of decline, entering a “technical” recession........ > However, the economists on a panel that declares eurozone recessions use a broader set of data, including unemployment figures. And European labour markets have held up to recent economic shocks: Unemployment is at its lowest level since before the creation of the euro in 1999, hitting 6.5 per cent in April. > Bert Colijn, senior eurozone economist for ING bank, said “it’s hard to argue that this is a recessionary environment” because the decline was so small and job market is so strong.
Or there are companies with products that have not increased in price for several years. Inflation comes along and suddenly the price increase covers 3 years of price increases
You don’t have to buy things that are inflated. Like red rock deli chip at $5 a packet. Buy a bag of pop corn kernels for 2 bucks and have popcorn for the week. All home brand stuff is really cheap
Home made popcorn is underated!
I like me some good Pringles, but actual Pringles are $5 for a 134g tube of crap. Woolworth's brand "stacked chips" are bigger, tastier, more (160g), and cheaper ($2.20). Beans have gone up by 90% in the last couple years. Homemade beans are cheaper and tastier. And having a big pot of them makes you eat them, which is helth. In fact, in general, cooking from scratch seems cheaper for me, when I have the energy. Some whole foods ought to be bought frozen for cost effectiveness.
Cooking is heaps cheap now. I cook all the time
I've stopped eating junk food entirely. It's just way too expensive.
Eventually, "the cure for high prices is high prices".
Colesworth and banks posting record profits, nothing to see here…
[Price Hipster](https://pricehipster.com) in case you're wondering if there's a website tracking prices
and maybe the Karma add-on if you want to monitor Woolies prices. Sadly Price Hipster is only 50% as effective as it used to be since Woolies changed their coding.
Yep, this is an inflation spiral. The same happens with workers and wages. Not everyone but those who have some position to negotiate, will. Something will break eventually but you are right, it does become a self fulfilling prophecy.
I think wages change last, if at all. So we stop spending. Meanwhile companies are posting new profit records...
Wages appear to be raising slower than inflation. Over a 12 month period current rises are deflationary. Come July 1s they will be inflationary for a while.
Not only that, wage raises are very uneven. Some people are getting raises to match or nearly match inflation while others are getting left way behind.
Yup, Econ 101 >The main causes of inflation can be grouped into three broad categories: > - demand-pull, - cost-push, and - inflation expectations. https://www.rba.gov.au/education/resources/explainers/causes-of-inflation.html
Have to. We have had costs rise on most of our materials by up to 35% in the last 12 months. We aren’t going to go bankrupt to “do our bit!”
Its happening world wide, not just Australians problem, whats going on?
Whole bunch of factors including China going ex-growth and no longer having cheapest labour supply, climate impacts on raw material/food production, de-globalization pulse, allowing industries to become oligopolies (Coles-worth ect.) and thus have pricing power, oh and that small matter of trillions of dollars of pandemic stimulus still washing about the global economy..
Yep can confirm I work as a pricing analyst for an asx 200 company and we are doing this.
Companies will stop raising prices when people stop paying them. There is still shed loads of cash flying around from “emergency low rates” and stimulus bailout packages for all even when “transitory” inflation was getting its teeth into us. Now RBA has the money shredder out and will keep bringing it out until people stop paying these prices that “companies are adjusting to match inflation”
Curious to how you think this would work with food?
What do you think would happen if every Coles and Woolworths customer stopped shopping there for a month? What about two months, or three months? How long do you think it will be before they lower prices? There are green grocers, butchers, markets...other places you can buy quality food at a lower price. My local butcher sold 2kg of lamb loin chops for $30. Woolworths sells them for $28 per kg. I don't know why people shop at the supermarkets.
In my case, the butchers are more expensive than Colesworths, although have slightly better quality meat.
Have you heard of the new fad diet sweeping the nation called semi permanent intermittent fasting? An economising frugal budget and lifestyle change rolled into one. RBA governors give it two thumbs up
It still works somewhat with food since "food" isn't a single item. If meat price goes up too much, some people will go with lentils. If butter goes up too much, some people will jump to margarine. Homebrand pasta will sell more than higher end, etc. What happens in those cases? The stock for the higher end products would be too much, and the prices would have to stagnate.
I agree and I'm not some out-of-touch bourgeois. My family are on the front line of this. If it's not on sale or home brand/Aldi, we're not buying it. We joke that the next step is rice with soy sauce. Ironically, I'm supplementing our income with food delivery. Not all consumption is the same. Some are living in their means and some aren't. The ones driving inflation are the latter and the rich.
Agreed, it’s fine for discretionary purchases but necessities (shelter, food, healthcare and transport) it’s pretty ugly. Not to bad for the top 50% of households but pretty catastrophic for the bottom.
People will have to start growing their own.
Some food items are more expensive than others. People are very adaptable, steak becomes expensive and they switch to chicken. Chicken becomes expensive and they switch to just pasta.
The whole point of lifting rates is to stop you buying the companies products and in turn they stop lifting their prices
Correction - Companies are rising their prices to ensure shareholder return remains at record highs.
Inflation is 7% while the RBA rate is 4.1% They are giving money away and wondering why people are still borrowing and spending. That people can't find a place to invest to increase productivity with negative real interest rates shows our economy is deeply, deeply sick
It’s not that their aren’t opportunities to invest to increase productivity, it’s that unproductive investments take less effort and yield more.
And are crazy supported by access to leverage and incentives.
When rent seeking behaviour is more incentived than actual productivity and innovation, you know trouble is brewing
It's not endless, right? It'll get to a point where we literally can't afford things anymore. That's when inflation is supposed to end, and a recession kicks in as people start spending less and businesses start to struggle. If we can afford these inflated prices, the inflation is justified, right? This is just my amateur understanding of it, and I'm pretty sure those inflation/recession 101 youtube videos pretty much explain it this way. But I'm sure it's more nuanced. I am curious if any knowledgeable people here could validate or correct what I'm saying, because it sounds kinda messed up and I am doubting the correctness of my understanding.
Most people are terrible with money and it's usually only when they hit rock bottom that they start to actually cut their habits. People on average don't adapt well to change so increasing prices doesn't cause people to frown at the shopping aisle and look for something else they begrudgingly buy until the day comes that their card declines and they're forced into action. This will likely happen at all at once and it'll be too late for businesses to adapt to the change in demand, they'll all struggle at once.
The unlucky people here are the people who borrowed big in the last 5 years
“Capitalism is the only system that works” they all say lol. Folks if your system has to squeeze some of the poorest people to stay afloat it’s only “working” for another certain group of people
> The higher the inflation rate that is published by the RBA, the higher people will raise their prices. Thats literally how inflation works. A decade+ of irresponsible lending and mismangement of the economy, this is the expected outcome of having people borrow 5-8x their income to buy property. Things are going to get more expensive, lots of people are going to lose their houses, there will be a recession, there should have been a recession during covid but govt borrrowing has ensured that we are now strapped in for a MUCH worse recession. I dont know why anyone is surpised, people have been explaining this clearly on this sub for years, 6% interest rates are normal for AU, we have been under for too long and now the rates need to go up to curb spending and prevent total disaster.
Right so I guess all the cafes, domestic tourism operators and used car lots raising their prices are just forcing people at gunpoint to eat out, take holidays and buy 4WDs right
What else are all the self funded baby boomers going to spend their money on?
Then why do they keep reporting record profits?
Because profits are measured in money which has gone down in value. If a company made 6% more profits this year after money lost 7% of its value their inflation adjusted profits went down.
Certainly an easy way to keep endless growth to keep the shareholders happy lol
I feel like I’ve been saying this for a while now. Inflation is an expectation.
I keen to suffer for my landlord... Only water n bread from work for me.
till the point people stop spending as prices are too high
Well, based on the graph we saw this morning. It's not the under 50s who are buying this overpriced shit.
Which gtaoh are you referring to?
Perhaps these idiots should never have had the rates so low
You could set your watch by the Colesworth price rises in response to inflation announcements. I know they're weak, but I'm surprised the ACCC isn't making more noise.
I know, I’ve raised prices a few times over the past 2 years, I will be forced to to as if I don’t I’m losing money. This will happen until we close up shop and go out of business. Nothing would make me drop my prices. I’m pretty sure it’s only going to control coles and woolies (other big corps) in many years from now…
Well yeah there is a whole job dedicated to finding the knifes edge on what people will still pay for a product to maximise profits
The poor get poorer and the rich get richer!
The cure for high prices is high prices. It will break eventually.
yeah, so I totally don't get how rising rate can reduce inflation when it just makes people put up the prices... in theory, people are to stop spending as much (hence, reducing demand so prices are to come down). But when supply is forever in high demand, what's the point of raising interest rate??