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."

Wednesday, April 20, 2011

Import prices surge 1.4% in Q1...Not good sign for Q1 CPI

Falling import prices--care of the rampant Aussie dollar--were a key driver of deflation and weak CPI prints of late. No more: import prices surged 1.4% over the quarter according to just-released ABS data, well above consensus estimates of a 0.9% rise, and, importantly, way beyond the forecasts of some of Australia's biggest banks (eg, CBA (-1%), NAB (-1%) and UBS (-1.5%)), which were looking for a decline in import prices as a consequence of continued appreciation in the currency. Could this be the China effect I have been talking about recently? Having said all of the above, the pass-through from import prices to CPI can be a bit of a lottery. The terms of trade also rose. Here UBS comments:

"The goods terms of trade climbed 3.8% q/q in Q1, after -4.5%, leaving the y/y rate broadly unchanged at 20.8% (from 2.5%). The level is about 1% below its Q3 2010 record high."