If Woolworths’ CEO knows anything about Australian consumers, the rate rise from the RBA (which the banks of course piled in on) might have been unnecessary.
Economic indicators are made up of past readings and now readings. If the CEO of Woolworths knows anything about Australian consumers, the interest rate rise from the RBA, which was piled in by the banks, might have been unnecessary.
It’s worthwhile reminding you that four out of the nine board members of the central bank’s interest rate setting group thought we didn’t need a rise now.
Before we look at what Woolies’ boss Amanda Bardwell is seeing from her cash-strapped customers, it’s important to point out that we copped an interest rate rise in February and now March. On top of that, the 50 cents a litre rise in petrol prices because of this Iran war has been compared to three rate rises, in terms of the slug on a consumer who drives a car.
So, since the beginning of 2026, car driving mortgagees with big loans have been taken to the cleaners by the RBA and petrol companies. This is bound to really hit the demand-side of inflation. However, the combined effect of rate rises, and petrol price hikes will add to cost push inflation.
That means, the RBA might be a short-term contributor to the inflation rise it’s trying to beat down! This is just another reason why economics is called “the dismal science”.
Now let’s look at what Amanda Bardwell is seeing at her stores because it could be a ‘now’ reading the RBA might take on board before it considers another rise in May.
This is what the supermarket chief and others are seeing:
1. Consumer sentiment is crashing.
2. It’s falling at double the rate normally seen at this time of year.
3. She expects it will get worse.
4. Suppliers such as farmers, who are dependent on fuel, are raising prices. That group includes tradies.
5. Bardwell thinks this week’s rate rise will worsen what she’s seeing in her supermarkets.
The Australian’s team at the newspaper’s Global Food Forum in Sydney on Wednesday reported what Jane Hrdlicka, chief of Dan Murphy’s and BWS, has observed from her vantage point: “What I expect will happen is during this period of uncertainty with fuel, people will hunker down a little bit and be uncertain about what to do – and there will be less spending as a consequence,” she said.
This CEO expected customers to dine out less and potentially moderate alcohol consumption as they juggled higher mortgage payments.
As a response to surging petrol prices, the Prime Minister has called a snap national cabinet for today to appoint “a supply chain tsar” to
oversee food and fuel distribution.
This is a national emergency. Given what people in the real world such as the CEOs of Woolworths and the likes of Dan Murphy’s are seeing about consumers, one wonders if the people in the not-so-real-world (like those at the RBA) should have talked to these smart people before they reached for the interest rate handle.
I always remember Gerry Harvey telling me that Treasury people used to talk to him before major events such as budgets. I asked him what they were like? Gerry said: “They were nice young blokes, but I don’t think they knew much about retail.”
Geez Pete where do you get your fuel price data from?
I reckon you’re driving an FBT free EV so you have no personal bowser experience.
The day before the attack on Iran I paid $1.75 a lite to fill my diesel ute.
Today it’s $2.80.
The day before the attack my wife paid $1.63 for 98 super.
Yesterday it was $2.55 and today $2.66.
No wonder people are filling drums, 4% ROI a day!!! What an investment!!!
Just so correct. They are the terrible 5 making a decision because they don’t get it. We have only x after tax with our pay.We did not cause petrol to go up but petrol affects every aspect of our life. Making delivering or products driving kids to sport etc. so now my pocket is attacked by petrol increases and my mortgage increase. Now less to spend BUT the cost of goods has gone up because the petrol cost has to be recovered. Petrol directly and indirectly affects everything. The first big signs will be a big transport company going broke. We have already been advised at work that our transport costs are going up and at a point that cost will have to be passed on. This is a self fulfilling nightmare.
These public servants don’t get it. Their income arrives via my tax . The world and our RBA Board have gone mad. Perhaps Trump could attack Australia in the outback (no injuries) we surrender immediately and ask for war reparations from the USA and start again in Australia.
Economists say that inflation is the result of too much “surplus” money circulating, as evidenced by excessive spending – too much money is looing for a home with not enough products to buy, creating more demand than supply.
The RBA’s simplistic notion is that by putting up home loan rates they will reduce the amounto of surplus money circulating, thus reducing demand and inflation.
But the thinking is so simplistic for so many reasons, firstly maybe a quarter of Asutralia are basically living off the proceeds of interest, so higher rates gives them more cash to spend, and often they are older and don’ty have to think so much about the long term future and want to enjoy life while they can.
Secondly, the outcome is not linear, in that at some poin tthe change for spending related ot change to rates breaks down – eg now that a significant portion of younger Australia are priced out of ownership, many just give up and say, let us enjoy life now, and worry about tomorrow when it comes. The urgency to save has gone, and the care to spend less, so now a bunch of short term consumer spending occurs to buy day to day comfort in the form of luxury items, driving up, you guessed it, inflation.
This is just two examples of the many peverse aspects of the simple minded reactionary changes, driven by simple minded policy. If there ws really a desire to curtail spending across the board in what is the fairest of many unfair ways, it is already in place with the GST, they government just needs to raise the GST, and use some of the extra revenue to ensure those at the botttom of the ladder can at least keep up by topping up unemployement and disability benefits and the like.
But that would require poltiical will of the kind tht is labelled as statesmanship, andthere is no sign in the next ever that a governament that even knows what a pair of balls is, will turn up.
Face facts, for a lot of people now, the best thing they can do is leave, because it will not get any better in the next decade at the absolute best, and maybe never, we are all but Argentina already. And for this, you can thank a series of self serving gutless and ball-less politicians from all the parties who have sold out Australia and Australians.