The Melbourne Institute Index of Inflationary Expectations for April
rose sharply to 4.6%, well above the March figure of 3.8%.

The Institute comments: “The rise in inflationary expectations to 4.6%
in April comes in the wake of renewed strength in oil and petrol prices
in recent weeks as well as further strong labor market data, with
unemployment remaining at almost 30-year lows.”

This comes as no suprise to Henry Thornton, who warned the Reserve Bank
in early April that inflation could soon exceed 4% or even 5%. It was a
great pity that the Reserve sat on its hands for throughout 2004 and
that monetary policy is still on the easy side of neutral.

Read more here.

Peter Fray

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