Comment by Oscar Tamsen
With the word “inflation” being on everybody’s lips these days and ravaging their bank accounts, several readers of the Clarence have contacted the CV Independent, claiming they cannot understand how the Federal Government’s current inflation index only amounts to 4.1%. They point out that their own shopping experiences reveal a far higher figure.
According to the Government’s Bureau of Statistics, the inflation index is a figure showing an increase in the “level of prices of goods and services that households typically buy over a period of time.”
The Bureau’s latest official figures claim that food prices have actually moderated to an inflationary level of 4.5 % while the cost of housing is 6.1% higher. Insurances and banking financial services show an increase of 8.1% with furniture being 6.9% and household services at a low 2.5%. The cost of health services, on the other hand, shows a 5.1% increase with clothing being only 0.9% above the 2023 cost.
By comparison with these figures, my personal experience with inflation up to the end of last year shows that my power bill is 25% up; my insurances are 30% more expensive while my cost of Strata management and building insurances shows a 9% increase over last year.
In addition to the above figures, my communication expenses are 23% up and my groceries on my regular shopping list are 25% more, with, for instance, imported Norwegian salmon now being $39.50 a kilo against the former $28 a kilo a matter of weeks ago.
Overall, the current period of inflation is costing me hundreds of per cent more than the Government’s official figure of 4.1%. From my calculations based on receipts I have held for research purposes, the “Public Enemy Number One” of inflation is costing me 36% more than it did up to last December compared with the Government’s official index — and I have not increased my shopping, power, insurance and other household service needs in any way.
Interestingly, some Australian suppliers of goods and services are now charging bigger surcharges when we inflation-hit consumers pay our accounts by credit and debit bank cards. Some companies are now charging 0.78% for the use of Mastercard credit cards; 0.65% for Visa credit cards; 0.30% for Mastercard debit cards; 0.14% for Visa Debit cards and 0.49% for all cards used at Australia Post offices. This practice is essentially unfair as the final cost per sale can be more expensive in the case of big money buys.
As average families spend an estimated $55,000 a year on groceries and services, if this card charge trend is to continue in the future, we are all going to be paying a sizeable additional levy per year when simply paying our dues.
Should we have the cashless society thrust on us by Government, as threatened by some quarters, there is no doubt that these new credit and debit card charges will add to inflation.
One thing is certain. Inflation has now become a problem of unexpected intensity throughout the globe. Years ago, when I studied economics, inflation was regarded as being a minor and temporary blip. Today, however, inflation is in itself a dangerous pandemic that crosses all national borders as a result of globalisation and threatens to become a major social disorder among the disadvantaged levels of society.
In Australia, we have to take great care that inflation does not become a way of life as many people are unwilling to control what monies they spend and locate where lower prices are available.
This thought was highlighted by Coles Supermarkets’ chief executive, Leah Weckert, who finally admitted last week that her supermarket giant must be “sharper” in controlling inflation for the sake of budget-conscious consumers. Ms Wickert said she feared that increasing numbers of her customers will now be forced to shop around to obtain a lower inflationary deal on their grocery shopping.
If inflation is left uncontrolled by the Australian Reserve Bank and the Treasury, it becomes a commercial habit and creates fictitious profits, as Coles and its competitor, Woolworths, recently found out. The real moral of the whole story is that high inflation-fed company profits beget higher business running costs, thus depreciating the value of those higher profits and seriously affecting national economies.
Before the Second World War when the world experienced inflation, some governments-imposed price controls on certain goods but this measure turned out to be a total failure and put many firms and important industries out of business and people out of work and on to welfare payments.