Chris Seaton, CEO of Origin Tea (right), with hisSri Lankan production partnerCharithra Hettirarachchi (left), says inflationary pressures could remain in supply chains for years(ABC News: Darryl Torpy)
We're getting new statistics.
AsAustralia endures its highest inflation in decades, the Bureau of Statistics isdoing something different.
It hasdecided to publishinflation data on a monthly basis, rather thanevery three months.
It's what economists have wanted for years, so they can keep better track of how inflation is evolving month-to-month.
ABS officials havefinally responded to their calls, after the chaos of the pandemic demonstrated to officialswhyit would be beneficial to have more regular inflation updates.
And according to the ABS's new monthly data released this week,annual inflation was 6.8 per cent in August.
In the last official quarterly data,annualinflation was6.1 per cent in the June quarter, and 5.1 per cent recorded in the March quarter.
It shows the forces of high and rising inflation are still with very much us. And it comes as the Reserve Bank board prepares to meet next week to discuss lifting interest rates yet again.
It's hitting supply chains, and coffee is an example
This historical period of high inflation has been rippling its way through Australia's economy, hurting different groups in different ways.
Chris Seaton, the CEO of Origin Tea, says you can see it clearly in his supply chain.
Mr Seaton supplies Australian coffee roasters, cafes, pubs, clubs, and hotels, and in July he launched into major supermarkets Coles and Woolworths.
I think the forward outlook with inflation is actually going to hurt businesses further,more than I think people predict, he told the ABC.
Tea is one of the most consumed beverages in the world, we'd like to see people to continue to drink tea, but I think due to the intricacy of how big the global supply chain is, on making a cup of tea, I think that flow-on effect hasn't passed through.
As one of the leading top five tea exporters of tea in Sri Lanka, we've seen tea costs increase from approximately $3 akilogram to about $5 a kilogram, so that's nearly a 75 per centincrease just on pure input costs.
Acost we used to shipfor one container from Sri Lanka used to be about $1,500 acontainer; we're currently paying on today's market rate, about $7,500 per container.
Chris Seaton of Origin Tea says business costs have skyrocketed due to global supply chain issues.(ABC News: Darryl Torpy)
Those costs alone, for a small business, you're paying an extra $250,000 to $300,000 purely on shipping coststhat wasn't there before, he said.
Mr Seaton said those eye-watering freight costs were actually an improvement on the costs he had been paying, and he's been trying to wear as much of the burdenas possible to remain competitive.
Our peak that we paid for a container was about $9,000 abox, he said.
We're currently managing our cost base and not taking on additional costs for future growth. We're currently in what we call stagnant mode, where we're just keeping our cost base the same and keeping employment the same, and trying to maintain our operational costs as efficient as possible, he said.
According to the ABS's new monthly inflation data, the annual rate of inflation for food and non-alcoholic beverages increased from 7.8 per cent in July to9.3 per cent in August.
What about households?
High prices aren't just hitting the goods in supermarkets.
They're affecting power bills, petrol bills, and weekly rents, and the bill shocks can be devastating.
Sonia Torrens, a single motherwho receives some income support from the Family Tax Benefit and JobSeeeker, says the price increases have been everywhere.
It shocked me when I opened up my last bills from my electricity company, she said.
My first quarter of the year was about $400, my second lot was about $750.
I rememberbananas, you could pick them up for you know, $1 or $1.50 a kilogram. You're looking at $3 to $4 a kilogramnow, and that's one of the staples in my son'slunch box, she said.
Ms Torrens said for nine months during the pandemic when income support payments were increased, it lifted her out of poverty and she didn't have to worry about finding social services like food co-ops.
Single mum Sonia Torrens at her home in Adelaide.(ABC News: Che Chorley)
But she has to relyon those services again, now that those payments have ended and consumer prices are rising so sharply.
She says charity groups and services that provide cheap meals and meal-kits have been essential.
If it wasn't for them, I would not be able to have a healthy option for my children.
She said she's trying to find savings anywhere she can by using electricity sparingly, and using less hot water.
Once I've paid my rent and everything else likebills ... I'm probably left with maybe about $400 a fortnight to support me and my children for food, entertainment, clothing, transport, you know, just the normal stuff that happens, she said.
What do economists think of the new data?
The new monthly inflation data from the ABS only covers the price changes of around 60 to 70 per cent of the goods in the ABS's consumer price index basket every month.
But it isdesigned to give economists enough information to help them keep track of how inflation is changing from month-to-month, rather than potentially being caught off-guard when the quarterly data is published.
Under the new statistical regime,the ABS's quarterly data will still be Australia’s key measure of inflation —but the monthly data will complement it.
Inthe graphic below, it shows how the monthly data (the blue line) may give an earlierand more subtle indicator of where inflation's heading, compared to the quarterly data (the blue dots).
The ABS's new monthly inflation data show annual inflation slowing slightly in August(Source: Australian Bureau of Statistics)
Economists say it will be useful, as long as people remember the monthly data won't presenta complete picture of inflation, given it only covers around two-thirds of the price movements in the CPI basket.
Gareth Aird, CBA's head of Australian economics, says this week's release shows that local inflation is still being driven the prices rises for goods and services that people can't avoid.
The upshot is that Australia’s inflation ‘problem’ is not getting worse, he said.
The global picture has also improved on the inflationary front, which has implications for Australia.
Commodity prices have fallen significantly over the recent past, shipping costs are declining and delivery times have shortened.
In summary, the supply side of the global economy is gradually improving at a time when the demand for goods will slow, he said.
https://www.abc.net.au/news/2022-09-30/new-monthly-inflation-data-to-track-annual-inflation/101486614
