Inflation: It will be down - but is it out?

Now those of you who are fairly fresh from reading about how food price inflation has surged back up again to a 30-odd-year high of 12.5% might wonder how it could be that 'inflation' is apparently coming down? The key thing to look out for in the figures in the coming week will be the breakdown between the so-called 'tradable' inflation and the 'non-tradable' inflation. In basic terms the tradable inflation refers to 'imported' inflation - such as through imports of oil products - while 'non-tradable' inflation refers to domestically generated inflation, such as building costs. In terms of non-tradable inflation, the ANZ economists expect reduced construction cost pressures to be knocking nearly 0.6 percentage points off annual non-tradable inflation. Because it is trying to knock over actual inflation before those inflation expectations are just as ingrained as they were in the 1970s and 1980s.