Australia's official inflation rate fell in November. By the way, our CPI data are now monthly. Previously, the official indices were quarterly, because not all components were sampled monthly --- the monthly data were subsidiary to the quarterly data, and subject to revision. Now it's the other way round, with the quarterly data now derived from the monthly series, bringing Oz in line with most other countries. The slight fall in inflation led, of course, to the market gurus postponing their projected rise in the cash rate. I wasn't convinced in my last report that the RBA needs to raise rates, and I remain unconvinced now -- see the charts below the inflation chart. Although household spending is recovering, the others are all weak. And a composite index of these five indicators, shows a post-recession recovery which has faltered. Raising the cash rate would be a bad idea. The only factor pointing towards a strong Ozzie recovery is metal prices, which are surging. Coal and oil and iron ore are not (coal and iron ore are our major mineral exports), which is significant, because metals and minerals do tend to move in tandem during commodity booms. The boom is confined to lithium, nickel, base metals and precious metals. How sustainable is this oddly concentrated commodity price run? How much is due to heightened risk from Trump and consequent hedging by Central Banks and investors? One is led to suspect this because world growth is not exactly robust. And since the oil price is _falling_ *, not rising, the effect of the commodity cycle on inflation here and elsewhere, will be limited. The Reserve Bank is no doubt thinking hard about all this. However, even though I think the RBA shouldn't _raise_ the cash rate, it certainly shouldn't _cut_ it, until we have greater clarity on commodities. In my last analysis, I said I would produce some charts to show that the economy is weakening, but never got round to it. Here they are. --- The unemployment rate continues to drift higher --- Job ads stopped falling at the end of the recession, but they have resumed their decline --- Real household spending is picking up --- A composite index of the 5 indicators from the charts above suggests a post-recession rebound, followed by stagnation. * The most likely reason oil prices aren't rising is because the rise in EV sales and ownership in China mostly, but also elsewhere, is reducing oil demand.

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