Why I’m Seeing Glimmers of Hope Right Now

Inflation, cost of living, and interest rates are pressing concerns for all of us. It’s easy to get caught up in the monthly news cycle, especially when the Reserve Bank of Australia announces changes to the cash rate, often leading to a sense of doom and gloom.

However, amidst the rising costs, there are indications that supply chain issues in certain sectors are stabilizing, offering a glimmer of hope for the future.

Here are some observations, albeit anecdotal:

• Freight Costs: The cost of shipping containers globally has now fallen below pre-COVID levels.
• Housing Materials: Items such as framing and chip-boarding are more readily available and cheaper than what wholesalers have been paying over the past couple of years.

Despite these positive signs, high demand in some sectors means that companies are not necessarily reducing their margins and passing on the savings to consumers. This situation appears to be a classic case of supply and demand. As long as demand remains strong, there is little incentive for companies to lower prices.

For example, the gap between the wholesale price of diesel and the price at the pump has been significant, with organizations like the NRMA in New South Wales calling it blatant price gouging. This discrepancy has a knock-on effect on the entire domestic supply chain, contributing to higher costs overall.

In my opinion, while potential price gouging in various sectors is far from ideal, these developments suggest that supply chain issues, both globally and domestically, might be starting to ease. Hopefully, this will lead to a reduction in the cost of certain goods in the future.

Fingers crossed.