I’m going to be late with my 2014 Budget assessment because of work deadlines on other things. Even this post will be a bare bones look at September’s increase on consumer prices, as interesting as it is (log annual and monthly changes; 2000=100):
September of course was when subsidies for petrol and diesel were cut by 2sen per litre, and you can pretty much see the impact of that straight off. The Pain index jumped to 4% in annual log terms, while overall inflation jumped to 2.6%.
Alongside that we also had a hike in excise duties on cigarettes, but that was comparatively minor compared to the fuel price shock.
The vital thing to watch out for is what’s euphemistically known as “second-order” effects, i.e. if there is any pass through from higher petrol and diesel prices into prices of other goods. So far so good, there doesn’t appear to be any – core inflation continues to rise in the range it has been for the last few months. Even food price changes haven’t accelerated much (log annual and monthly changes; 2000=100):
…at least, not to the point that you can statistically conclude that the subsidy cuts were to blame. But that’s something to keep watching out for over the next quarter or so.
September 2013 Consumer Price Index report from the Department of Statistics