In the Aussie press today:

  • The RBA says we've had "a large downward shift in the average rate of retail inflation" that is not explained by labour costs or import costs.
  • It blames technology (the internet) but also competition spurred by new foreign retailers.
  • Aldi is not only lowering prices via direct competition - it is also showing other retailers just how badly Aussies want discounts. That is encouraging Coles and Woolies to slash prices too, even where Aldi is not a big threat.

Aldi is a supermarket chain selling goods cheaper than we have been accustomed to in Australia. "Coles and Woolies " are the established big supermarket chains.

More from the RBA piece:

  • Retailers have not been passing on the effect of the lower Aussie dollar ... a climate of fear for Australian retailers. They are deeply worried about what will happen if they raise prices.

Article is here

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The RBA meet next week (July 5) - while a rate cut is not the consensus expectation, the bank has been known to spring a few surprises recently.