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Satish Ranchhod: Westpac Senior Economist on the latest inflation numbers, OCR · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: More evidence inflation is calling stats Ins releasing their selected
• 0:03
  Speaker 1: price index. This shows food inflation up one point nine
• 0:06
  Speaker 1: percent on last year. The big drivers of a softer
• 0:09
  Speaker 1: increase meat which fell one point four Petrol easing as well,
• 0:13
  Speaker 1: down six percent for the month, with diesel down twelve percent.
• 0:17
  Speaker 1: Ranchodrenthued rather is west Paxen your economists with me this morning?
• 0:21
  Speaker 1: Statistic Good morning morning, Ryan, So I'm returning a corner.
• 0:25
  Speaker 1: What do you reckon?
• 0:27
  Speaker 2: I think we've still seen some pretty strong inflation pressures.
• 0:29
  Speaker 2: We're it's pretty welcome. You see those law process and
• 0:32
  Speaker 2: the meat and petrol and inflation probably is coming down
• 0:35
  Speaker 2: from where it was a couple of months ago, but
• 0:37
  Speaker 2: it's still pretty hot. I think there's a lot of
• 0:39
  Speaker 2: pressure on household's finances.
• 0:41
  Speaker 1: And the OCA is going to keep going up anyway,
• 0:43
  Speaker 1: isn't it.
• 0:44
  Speaker 2: We've still had inflation sitting well above three percent, and
• 0:47
  Speaker 2: that's not just down to things like fuel. So for
• 0:49
  Speaker 2: the reserve bank that are still at a pretty hot inflation picture,
• 0:53
  Speaker 2: there are probably going to raise the OCO a couple
• 0:55
  Speaker 2: more times this year.
• 0:56
  Speaker 1: So you reckon about three percent at the moment, do you?
• 0:58
  Speaker 1: For inflation?
• 1:00
  Speaker 2: I think it's probably sitting actually a little bit higher
• 1:02
  Speaker 2: than that. It's probably going to sit about three to
• 1:04
  Speaker 2: three and a half percent by the end of this year,
• 1:06
  Speaker 2: and that's well above where it should be.
• 1:08
  Speaker 1: So Teas, I've been looking this morning at governments the
• 1:12
  Speaker 1: world over, not just ours, but borrowing and the bond
• 1:16
  Speaker 1: yields going up, the cost of their borrowing is going up.
• 1:18
  Speaker 1: The cost of their borrowing is now higher for a
• 1:21
  Speaker 1: lot of advanced economies than at any time since the GFC.
• 1:24
  Speaker 1: Do we worry about that?
• 1:26
  Speaker 2: We're seeing that pressure come through of the finances of
• 1:29
  Speaker 2: a lot of governments right now, and that is really
• 1:31
  Speaker 2: important because that is going to be flying through to
• 1:34
  Speaker 2: pressure on their finances, greater pressure for them to cut
• 1:37
  Speaker 2: back spending. And we're seeing that there's a lot of
• 1:40
  Speaker 2: demand for services. That castles me right now.
• 1:43
  Speaker 1: So how do you get out of this spiral where
• 1:46
  Speaker 1: the government needs to keep borrowing, the interest rates need
• 1:49
  Speaker 1: to keep going up, and the cost of that borrowing
• 1:51
  Speaker 1: goes up too.
• 1:53
  Speaker 2: I think this comes down to a really tough trade
• 1:56
  Speaker 2: off for not just governments, but for all of us.
• 1:58
  Speaker 2: We need to have to think about what we want
• 2:00
  Speaker 2: in terms of government services, but also how we're going
• 2:03
  Speaker 2: to fund it. There's a really tough discussion to have.
• 2:05
  Speaker 2: It's going to be a big issue going you to
• 2:07
  Speaker 2: this year's election.
• 2:08
  Speaker 1: All right, Satish Ranchod, appreciate your time this morning. That
• 2:11
  Speaker 1: is west Pac Senior economist site Reinshod. For more from
• 2:15
  Speaker 1: Early Edition with Ryan Bridge, Listen live to news Talks
• 2:18
  Speaker 1: it'd be from five am weekdays, or follow the podcast
• 2:22
  Speaker 1: on iHeartRadio.