The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Thursday, April 21, 2011

Forecasting CPI using producer prices--very interesting

A mate of mine--who will remain nameless--has just ripped off this model using the consumer component of the ABS producer price index to forecast CPI. As discussed, the PPI (c) released today was the largest on record at +2.4% for the quarter. As you can see below, my mate's model does a very good job of projecting CPI. So the question is, then, has there been some sort of regime change that will result in a deviation of CPI from PPI (c), or are we about to see a surge in consumer prices?