The Inflation Lie
How the Aussie Federal Government cooks the books and erodes your living standards.
Every quarter the ABS and the Reserve Bank pat themselves on the back. Headline inflation is under control. Underlying inflation is easing. They tell us wages are growing, households are holding up, and the economy is resilient. They sit in Canberra conference rooms sipping soy lattes and talking about resilience while every small business owner in the country is being strangled.
Let me spell it out. The official inflation rate might be three or four percent. But in the real economy where people build, supply, ship and pay wages, inflation is closer to eight percent and in some cases higher.
Steel prices are up again. Freight costs never really came back down. Insurance premiums are climbing year after year. Subcontractor labour is scarce and charging a premium. Compliance and red tape add another invisible tax. None of this makes it into the tidy CPI basket. None of this is measured when the RBA decides to squeeze mortgage holders a little more.
What do they strip out of the underlying rate? Fuel, fresh food, seasonal costs. In other words, the things that actually move our cash flow week to week. The inflation that matters to families and small business is exactly what gets discounted in the numbers.
The end result is a two tier economy. Canberra and Treasury measure an abstracted number that makes them feel clever. SME owners measure the bills on their desk. The first is theory. The second is survival.
Every supplier I deal with has bumped their prices by between 10 and 15 percent in the past twelve months. That is the real number. That is the inflation that guts margin, destroys competitiveness, and wipes out the middle class business owner who cannot pass all of it on.
They tell us inflation is coming under control. Tell that to the builder who just got slugged twenty percent more for insurance. Tell that to the café owner who saw milk and coffee beans spike ten percent in six months. Tell that to anyone who has to fill a diesel tank.
Australia has a class of policymakers who live in theory and a class of small business owners who live in reality. The more they congratulate themselves for taming inflation, the more contempt every tradesman, shop owner, and operator should feel.
The truth is simple. Inflation is not three percent. Inflation is not four percent. Inflation for real Australians is closer to eight. And that eight percent is the difference between building a future and shutting the doors.