Stephen Koukoulas

a rapid-fire pinball machine going every which way, up and down and left and right.

Even a good number is going to be bad this week, I think, because if I look through the market consensus, we're likely to see the headline annual inflation rate go to about 4.6%, 4.7%.

And remember, the target's 2.5%.

The midpoint of the target band is 2.5%.

So we're going to be almost double inflation.

The target, that's a big miss.

Now, a lot of that is the petrol price, to be sure, of course.

No question about that.

However, as we have been discussing previously, there was an uptick in inflation prior to the oil shock in any event.

So this is just making it more problematic.

the trimmed mean or the underlying inflation rate will be a little bit more moderate because the petrol price will probably be trimmed out of the headline figure.

But even then, we're getting a 3.5% inflation rate, so well above the midpoint of the range.

And as we mentioned, we've already got signs that the economy is slowing, house prices are weakening, auction clearance rates.

So again, not that you target those issues with interest rates, but it's a sign of increasing caution out there in the economy.

And

The risk of stagflation, that is high unemployment with high inflation, coincidentally.

Normally, in an economic cycle, you get one up, one down, one down, one up.

You know, that's the business cycle.

And stagflation is when you've got this absolutely horror story of rising inflation.

I think we can put a big tick on that.