Latest / Best of Business / Cameron Bagrie: independent economist on what's really behind the increased cost of living

Transcript

Cameron Bagrie: independent economist on what's really behind the increased cost of living · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk zed B. Follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Cheap mortgages are helping to temper the petrol price hikes,
• 0:19
  Speaker 2: Thank you, Donald Trump. Stat's end ZED cost a Living
• 0:22
  Speaker 2: number out today, three point two percent. It was for
• 0:24
  Speaker 2: the twelve months to the June quarter. That's up from
• 0:27
  Speaker 2: the previous quarter March, which was two point one percent.
• 0:30
  Speaker 2: The difference is basically well a third of it at
• 0:32
  Speaker 2: least petrol. Cameron Bagri, founder of Bagery Economics, with me.
• 0:35
  Speaker 3: Now, Hey Camp, Oh, good afternoon, Ryan. Yeah, So no
• 0:38
  Speaker 3: surprises there, No, I.
• 0:40
  Speaker 4: Don't think there's too much of a surprise. Look went
• 0:43
  Speaker 4: from two point one to three point two. Obviously, the
• 0:46
  Speaker 4: cost of Living index includes interest costs, whereas the CPI
• 0:51
  Speaker 4: includes construction costs, so you got a bit of a
• 0:53
  Speaker 4: statistical quirk between one versus the other. But if you
• 0:56
  Speaker 4: look sick that, sit back and look at the broad
• 0:58
  Speaker 4: story across both the living cost and next and consumer
• 1:01
  Speaker 4: price inflation, they're both up at one percentage point on
• 1:04
  Speaker 4: twelve months ago. So they're heading north. And of course
• 1:06
  Speaker 4: when you head north. Siphon's Money People's pockets.
• 1:09
  Speaker 3: And that is a Trump story, isn't it.
• 1:13
  Speaker 4: Well, it's a Trump story. But yeah. Also, if you
• 1:15
  Speaker 4: strip out your food, energy, or you look at what's
• 1:19
  Speaker 4: called core inflation, your core inflation in your ze, depending
• 1:22
  Speaker 4: on which measure you look at, is still running around
• 1:24
  Speaker 4: two and a half to three. Now, in a perfect
• 1:27
  Speaker 4: world or what we used to see pre COVID year,
• 1:30
  Speaker 4: that core inflation number used to average around two percent. Yeah,
• 1:34
  Speaker 4: so it looks like we're in a structurally higher zone
• 1:37
  Speaker 4: for what's called core inflation. And then you get the
• 1:39
  Speaker 4: fun and game sort of stuff from regard to energy prices,
• 1:42
  Speaker 4: food prices, you add Trump flation, all that sort of
• 1:44
  Speaker 4: stuff that comes on top. Yeah, but there's a little
• 1:47
  Speaker 4: bit more of a sticky, persistent inflation. It's the obvious
• 1:50
  Speaker 4: drivers grates, it's insurance that you energy bills, which the
• 1:54
  Speaker 4: reserve band can't control.
• 1:55
  Speaker 2: CPI four point one percent. This stats in the number
• 1:59
  Speaker 2: three point two percent. Why does the CPI not include,
• 2:02
  Speaker 2: I suppose in this case the benefit of lower mortgage rates.
• 2:05
  Speaker 3: Why don't they count interest?
• 2:08
  Speaker 4: Because what they got within the CPI they got sort
• 2:11
  Speaker 4: of an equivalent, and the equivalent that got within the
• 2:14
  Speaker 4: CPI calculation is construction costs i e. The cost of
• 2:18
  Speaker 4: building house. Yeah, so there's a definitional difference here between
• 2:22
  Speaker 4: the household Living Costs Index versus what we see within
• 2:25
  Speaker 4: the CPI. One includes interest costs whereas the other one
• 2:28
  Speaker 4: includes construction costs.
• 2:30
  Speaker 3: Cameron Bagri Independent Economists with.
• 2:32
  Speaker 1: Us for more from News Talks at b Listen live
• 2:36
  Speaker 1: on air or online, and keep our shows with you
• 2:38
  Speaker 1: wherever you go with our podcasts on iHeartRadio.