No inflation woes, still

Inflation figures expose carbon scare campaign

Tim Colebatch feels vindicated:

Some wrecking ball that was! Australia's first year with a carbon tax has ended with inflation so low that it was only the carbon tax that kept inflation from falling out of the Reserve Bank's target range.

The Bureau of Statistics reports that in the year to June, consumer prices rose 2.4 per cent on the raw data, 2.3 per cent after seasonal adjustment, and 2.2 per cent on the trimmed mean measure, which strips out the biggest price rises and falls to define underlying inflation.

If you take out the September quarter - as the next set of inflation figures will - then inflation over the nine months to June was running at an annualised rate of just 1.3 per cent. Underlying inflation is tracking at 2 per cent.

And while the dollar has fallen in the past three months and petrol prices have jumped, it's odds-on that the next measure of inflation will start with a 1.

That is low inflation by any measure. It shows the Coalition's scare campaign against the carbon tax was just a scare campaign.

What were other right wing figures saying about the carbon "tax" and inflation?

Well, a retiring RBA board member and businessman at the start of 2012 was worried, and told The Australian (who else):

... Mr Kraehe said the introduction of the carbon tax, rising wages in the resource sector and a weaker Australian dollar could all combine to put upward pressure on inflation in the year ahead. While interest rates were currently "ideally positioned" at 4.25 per cent, Mr Kraehe said inflation was set to become "more of an issue".

And look, guess which paper (hint:  after "The", it starts with an "A") ran this opinion piece from the anonymous (but leading independent economist, apparently) "Henry Thornton":

A tax of $23 a tonne for the CO2 emissions of Australia's 500 greatest polluters will severely handicap Australia's most productive industries. Production, jobs and emissions will be shifted offshore to countries and competitor producers less concerned than the Australian government about the supposed costs of greenhouse gas emissions.

This is action guaranteed to reduce the productivity of Australian industry, increasing the strength of the stagflationary forces already evident.

 Stagflation!  Well who does that remind me of?   Yes, he was having a gripe in October last year:

 Government (and Treasury?) would like us to believe that the carbon tax is on track, the modelling all fine, and concerns about utility prices overblown.

 And here he is, complaining that the ABS was not going to try to differentiate the contribution of the carbon price to inflation.

When overall inflation is so well in the range, what would be the point?