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April 9 2021


1. Food fight…

We’ve heard news of renewed discounting by a major Australian supermarket this week (prices are down at Coles!), so we had a look at what’s been happening in food prices in Aus, and versus the rest of the world. In Aus, at-home food (ex-fruit & veg) prices hardly rose between 2009 and 2018 and then the drought, A$ depreciation and COVID put upward pressure on prices until they flattened out in the second half of 2020. AUD appreciation should now be putting some downward pressure on tradable food prices (which account for the bulk of food prices). Eating out prices continued to rise, which didn’t come as a surprise to us!

Meanwhile, the UN gauge of global food prices climbed for a 10th month in March, driven higher by costlier vegetable oils, meat and dairy. China’s buying spree and shrinking supplies of many staple products are fueling the gains, threatening faster inflation.  

Source: Macquarie 

Source: Bloomberg 

2. Here’s to growth…

The IMF upgraded its global economic-growth forecast, for the second time in three months, this week. The world’s output will expand 6% this year, up from the 5.5% pace estimated in January, the IMF said in its World Economic Outlook published on Tuesday. That would be the most in four decades of data and follows a 3.3% contraction last year that was the worst peacetime decline since the Great Depression. Looking further ahead, global GDP for 2022 is seen increasing by 4.4%, higher than an earlier estimate of 4.2%, with the IMF Chief Economist commenting “Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible”. However, the growth came with a warning about widening inequality and divergence between advanced and lesser-developed economies.

3. Hello travel bubbles…

New Zealand announced their travel bubble with Australia this week! – Allowing Australian travellers to enter the country without mandatory hotel quarantine from April 19.

  • In 2019, 1.5m Aussies flew to NZ spending ~$2.5bn & 1.3m Kiwis flew to Australia spending ~$2.4bn.
  • Portfolio holding, Qantas, said Trans-Tasman seats are selling “like hot cakes” and noted frequent flyer points redemptions were ~80x that of a normal day! Whilst Virgin Australia has suspended the sale of most of its NZ flights until the end of October, saying the “evolving border requirements” of the bubble adds too much “complexity” to its business.
  • Air NZ has initial plans for 50% of pre-covid capacity on the ditch crossing, whilst Qantas & Jetstar are planning 83% of pre-covid capacity.

And see below ANZ data for March spending, showing big increases in travel and entertainment spend.