CPI comments of note !!

Hi all,

This quote from the ABS arrived in my Inbox – I thought it worthy of some discussion:-

“Non-discretionary annual inflation is higher than the CPI and more than twice the rate of Discretionary inflation. Non-discretionary inflation includes goods and services that households are less likely to reduce their consumption of, such as food, automotive fuel, housing and health costs, “ says the ABS.

It is a very good point.  Particularly for those living “close to the wind”, this is very important information.  In a nutshell, those costs we CAN’T do without are increasing at a quicker rate than those things we CAN do without.

As investors, even if we are not directly affected, we may have (many) tenants who ARE impacted, and any rental increase adds to THEIR pain, thus possibly indirectly affecting us.   Certainly the world today, as we come out of Covid and face possible oil shortages (thanks Biden, Putin et al) and food cost increases (due to staff shortages along with fuel cost increases) becomes a more fragile place.  Consider the RBA and a future Cash Rate increase, and consider how Banks might react to all the above – as well as increasing their rates, they might also choose to lift their qualifying rate to minimise THEIR risk even as yours has increased.

How are YOU going in these times?  Are you directly affected, or just indirectly?   Are you doing anything specific to manage this possible future?

Benny