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."

Sunday, July 31, 2011

More on the 'explain-away-inflation' fiasco...

RBS and Westpac both separately estimate that if we exclude the deposit and loan facilities expenditure class from the trimmed mean measure of inflation in Q1 and Q2, it still remains at a high 0.8% per quarter (3.2% annualised). (Note for Westpac: the trim used by the ABS/RBA is a 70%--not 90%--price distribution.) As I have explained before, including/excluding the deposit and loan facilities expenditure class should have no material impact on the weighted median inflation measure, which to two decimal places printed 0.81% and 0.92% in Q1 and Q2. So if we average the trimmed mean and weighted median over the first and second quarters in 2011, and then sum those averages over the last six months, we find that core inflation in Australia has been running at a 3.33% annualised pace. I am not sure how this gives anyone comfort (although it is certainly a touch better than the 3.5% annualised pace excluding DLF).