The Consumer Price Index, released at 11.30am by the ABS, was surprisingly benign yet again. For the March Quarter, the CPI rose by just 0.1%, making for a 2.4% rise through the year.
The news is likely to be greeted by all with a huge sigh of relief, as it will surely put interest rate rises on the backburner. The Howard Government is likely to celebrate this low figure, as it assures their image as the better economic managers will stay intact.
Whilst falling food prices were one of the main downward forces in the CPI, and they will be stripped out for any ‘core’ measure, it is still likely to be considered well on this side of the rate hike fence. Henry’s judgement that RBA got it wrong looks like it might be wrong. Stay tuned for the RBA’s underlying measures of inflation.
A close colleague of Henry’s was recently at a lunch for a dozen or so Liberal supporters at which the PM was guest of honour. “Kevin Rudd is a glass jaw with legs” the PM explained. “He is precious, flawed and pious”.
It seems the old boy was just warming up for his more public demolition derby, now solidly underway. “John Howard has launched a full-frontal attack on Kevin Rudd’s credentials, declaring that only the Coalition can be trusted to deliver targets to cut Australia’s greenhouse gas emissions without wrecking the economy.”
John Howard has vowed to “stay the course” on workplace reform, warning that Labor’s plan to roll back the changes could wreck the economy.
Accusing Kevin Rudd of attempting to forge a new brand of politics “without hard choices, without trade-offs and without unintended consequences”, the Prime Minister said the Labor leader offered voters the politics of good gestures and good intentions and little else.
His government has never lost sight of the “human dividend” of jobs. It has been a party of economic reform, achieved against the systematic opposition of Labor. They still do not have a credible plan to keep the economy strong.
Henry’s pal was depressed about the government’s chance of winning the next election. But they will not give up easily.
“The kitchen cabinet is looking closely at Federalism, running ideas past High Court Judges. One plan is to stop collecting GST, as the states are in breach of their agreement with the Commonwealth. They haven’t yet decided to do this, but Peter Costello is laying the ground just in case.”
More reading at Henry Thornton.