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Economics
28 Jun 2024
Inflation rises to 4 per cent
The monthly consumer price index rose to 4 per cent in the 12 months to May, up from 3.6 per cent in April, exceeding the market’s expectations. It was the third monthly rise in the CPI, indicating that more needs to be done to contain inflation and return it to the target range.
The primary driver of the price surge was the housing sector, which experienced a substantial jump to 5.2 per cent in May, up from 4.9 per cent in April. The tight rental market is a key factor, pushing rents up by 7.4 per cent over the year, significantly impacting the overall inflation rate.
Underlying inflation remained high at 4 per cent in May, albeit a modest decrease from 4.1 per cent in April. These results suggest that the Reserve Bank will likely not consider cutting the cash rate anytime soon.
Labour productivity stagnates
The latest Productivity Commission Quarterly Productivity Bulletin report shows that labour productivity has stagnated over the 12 months to March 2024.
While there has been modest growth in private (market) sector productivity (0.8 per cent for the year to March), this has been offset by contracting productivity in the public (non-market) sector (-2.2 per cent).
This resulted from strong growth in hours worked in non-market sectors (5.5 per cent) compared to the market sectors (-0.5 per cent).
The Productivity Commission suggest that significant increases in labour market growth, particularly in the non-market sectors of health care and social assistance, are placing downward pressure on productivity, as new entrants into the workforce require more time to learn and upskill.
The full report from the Productivity Commission is here.
Mandatory Food and Grocery Code
Dr Craig Emerson delivered the final version of the Food and Grocery Code of Conduct review on Monday. The government accepted all 11 recommendations, including making the code of conduct mandatory.
All supermarkets with annual Australian revenue of greater than $5 billion or more must comply with the code. Key recommendations that have been adopted include the creation of an anonymous supplier and whistle-blower complaints mechanism within the ACCC to enable market participants to raise their issues directly. The code will also strengthen formal and informal dispute resolution arrangements and improve outcomes for fresh produce suppliers.
The code includes penalties for breaches: up to $10 million, three times the benefit gained from the contravening conduct, or 10 per cent of turnover in the preceding 12 months.
The final report of the Food and Grocery Code of Conduct review is here.
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