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The cost of camping gear might be about the only thing not going up in price this year.(Source: BCF\/Getty) <\/p>\n The cost of camping gear might be about the only thing not going up in price this year.(Source: BCF\/Getty) <\/p>\n
Inflation has hit Australia hard<\/a>. But for now, it is still mostly about fuel.<\/p>\n “There were few signs of second-order impacts of higher oil prices flowing through to other parts of the basket,\u201d said ANZ Bank economists, after examining the entrails of the most recent inflation data. \u201c\u2026 but we expect that to become more evident from April.”<\/p>\n And it’s becoming evident.<\/p>\n RELATED <\/strong><\/p>\n Fuel price inflation is a laser-guided missile hitting us right in the fuel tank. But the shockwave is broader and will disrupt far more categories. The analysis is interesting \u2013 not everything goes up when fuel does. Some categories actually go down.<\/p>\n Australia has a lot of inflation data, and I have rummaged through it with my statistical gloves on, to fish out for you the strongest correlations in the dataset.<\/p>\n I asked a powerful statistical engine to quantify the strongest correlations in the data \u2013 those categories where fuel inflation and another type of inflation both move in the same direction. (I feel compelled to tell you, I\u2019m not saying this was AI analysis. The work done by the silicon circuits is just the calculations. I decide what to measure, type in the code with actual fingers, and figure out what the numbers mean. Using actual neurons, not their slippery silicon imitators.)<\/p>\n So, what was found? <\/p>\n There are some surprise categories where petrol prices correlate tightly with other prices.<\/p>\n Like the cost of building a new home. We\u2019ve covered this topic in these (digital) pages<\/a>. The price of a newly built dwelling tends to rise when fuel prices rise. Houses are made of heavy stuff, transport is a huge part of their cost. Bricks and steel also contain a lot of embedded energy \u2013 which is to say they are made using heat \u2013 lots of it. So when the price of oil goes up, the cost of putting together a big suburban development goes up. And a tall city apartment tower does too.<\/p>\n Reminder: the new dwelling purchase category includes the price of the house but not the land. The land is an asset, not a consumption good \u2013 you can\u2019t use it up so it doesn\u2019t fit in a consumer price index. For the same reason stocks and bonds aren\u2019t in the consumer price index either. Rising interest rates could hit the price of assets, but that is not part of this analysis.<\/p>\n Furnishings are likely to rise as well. (They are also big and bulky). Same with domestic services (e.g. when you phone the electrician \u2013 you’re paying for him to come in his ute).<\/p>\n Interestingly, equipment for camping and fishing becomes cheaper when fuel inflation goes up. Looks like the BCF-ing prices go down when fuel goes up. After all, how do you get to your remote campsite if not by car? And what do your pour into those dual Yamahas that hang off the back of your fishing boat? Again, fuel.<\/p>\n Economists have the concept of \u201ccomplements\u201d and \u201csubstitutes\u201d to describe this. If the price of a good goes up, the price of its substitutes will go up and the price of its complements will go down. Like if movie tickets go up, Netflix will sneakily slide their price up. Netflix is a substitute for movies. But the price of popcorn will go down \u2013 popcorn is a complement for movies, and if ticket prices rise, the big popcorn factories have truckfuls of product not going anywhere. So they cut prices.<\/p>\n Camping is a complement for fuel. I bet that as long as the price of diesel hovers round $2.50 you will be able to negotiate a good price on a four-person tent at your local camping retailer.<\/p>\n Correlation, of course, is not causation. And the correlations we are talking about are not deterministic.<\/p>\n The next chart shows the inflation result in each of the quarters since the 1990s for new house prices vs fuel, and for camping equipment vs fuel. It\u2019s not guaranteed that a camping holiday will get cheaper in 2026, but it\u2019s a decent bet.<\/p>\n Get the latest Yahoo Finance news – follow us on <\/strong>Facebook<\/strong><\/a>, <\/strong>LinkedIn<\/strong><\/a> and <\/strong>Instagram<\/strong><\/a>.<\/strong><\/p>\n The price of most categories is only going to go up at the moment. (Source: Jason Murphy) <\/p>\n
It might be time to plan some camping trips. (Source: Jason Murphy) <\/p>\n