Australia May CPI undershoots on the headline but core inflation tops forecasts at 3.6%
Welcome to Talking Business, a podcast produced in Melbourne Australia, built on the traditional lands of the Kulin Nation. The podcast is available on the Acast site, my own website, the Apple podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at businessacumen.biz
I am Leon Gettler. My job is review and monitor the week’s news in business finance and economics. I bring it all to you every week.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
This is episode number 21 in our series for 2026 and today’s date is Friday June 26
First, I’ll be talking to Power Projects founder Chris Power about how leaders can better respond when the fundamentals of their organisations are shifting.
And I’ll be talking to AMP chief economist Shane Oliver about the markets and inflation.
But first, let’s talk to Chris Power
So what’s happening in the news?
Ten years on from Brexit, the UK is about to get its seventh prime minister in a decade — Keir Starmer just resigned. The country’s been stuck in a brutal loop since the 2008 financial crisis: austerity gutted public services, Brexit shrank the economy by around 6-8% without actually reducing immigration, Covid scandals trashed trust in government, and then the Ukraine war sent inflation to a 40-year high. Real wages haven’t grown since 2008. Millions of kids are in poverty. Andy Burnham — the charismatic ex-Mayor of Manchester — is the favourite to take over, but he’s walking into the same impossible trap every leader before him has faced: how do you grow the economy without raising taxes or panicking the markets?
Australia’s inflation is still running hot, and it’s keeping the Reserve Bank firmly in “no rate cuts anytime soon” territory. The latest numbers from the Bureau of Statistics show the trimmed mean — that’s the measure that strips out volatile items and the one the RBA watches most closely — came in at 3.6% annually for May. That’s slightly above what economists were expecting, and still well above the RBA’s 2-3% target band. The headline CPI figure was even higher, at 4%, with every single category of goods and services rising in price. This isn’t new territory — inflation has been above the RBA’s target since last year — but it means the pressure is still on. Add in three rate hikes already this year and rising fuel costs linked to the US-Iran conflict, and households are really feeling the squeeze. The RBA board meets again on August 10th and 11th, and analysts are tipping at least one more hike — possibly pushing the cash rate to 4.6%. Markets are pricing roughly a two-in-three chance of a final hike before year’s end. Now, there is a silver lining on fuel. Peace talks between Washington and Tehran are underway, the Strait of Hormuz is open, and oil prices have been falling — with more than 70% of that earlier price surge already unwound. That’s dragging headline inflation down faster than expected. NAB reckons on a quarterly basis, CPI is actually tracking below the RBA’s own forecast of 4.8%. But here’s the catch — that underlying inflation figure tells a different story, and that’s what the RBA is focused on. Until that comes down, don’t expect any dovish pivot. Tomorrow we’ll also get the May jobs numbers — economists are expecting unemployment to tick down slightly to 4.4%, after hitting a four-and-a-half year high in April.
Labor and the Greens struck a deal to pass changes to negative gearing and capital gains tax. The big trade-off: the Greens agreed to support the tax bill, and in return Labor agreed to stop self-managed super funds (SMSFs) from borrowing money to buy residential properties — closing a loophole that gave wealthier investors a leg up at auctions. The Greens wanted more but called it a small step forward. On the downside, a separate NDIS reform bill got pushed back to August after an extended inquiry, which will cost the budget a few hundred million in the meantime.
This one’s a big deal in Australian business circles. Richard White — the billionaire founder and executive chairman of WiseTech Global, one of the country’s most successful software companies — is now under formal investigation by the Australian Federal Police’s human exploitation taskforce. The investigation stems from a complaint by a former executive at another company White controls, called Kyckr. That executive, Kathy Phelan, alleges White used his power and influence to coerce a Brazilian woman named Caroline Heidemann — who had previously worked for WiseTech as a cleaner — into a sexual relationship, exploiting her immigration status and financial vulnerability. Heidemann made similar claims last year and ultimately settled with White. But here’s where it gets more complicated. Phelan alleges White used a Kyckr letterhead — which she says he obtained under false pretences — to apply for a visa for Heidemann, describing a job that Phelan says flat out did not exist. She says she was never consulted about any of it, and only found out later that her name and position had been associated with the application. Now, to be clear — being investigated is not the same as being guilty. White hasn’t commented. But this is piling on top of a separate ASIC investigation into whether White traded more than $200 million in WiseTech shares during a blackout period. He’s argued he was a consultant at the time and had legal advice. WiseTech shares are down almost two thirds over the past year, from a high of $135 to under $37. Some big institutional investors including AustralianSuper have already sold out. But there are also plenty of shareholders who want White to stay — he co-founded the business in 1994 and many see him as central to its success. It’s a really messy situation and there’s clearly more to come.
Big news out of KPMG Australia this week — and it is not good for the firm. Chairman Martin Sheppard is resigning by the end of August, along with two senior audit partners, Eileen Hoggett and Paul Rogers, as the scandal over misuse of confidential client documents continues to spiral. So what actually happened here? A former KPMG employee blew the whistle, alleging that auditors had repeatedly accessed confidential pitch documents belonging to rivals EY and PwC — documents that had been submitted to the Lendlease board. An independent investigation by law firm Allens confirmed it happened not once, but twice. That’s a serious breach of trust in an industry where trust is basically everything. What’s made this worse is how KPMG handled it. Sheppard told a parliamentary inquiry just last Friday there had only been “three instances” of misuse — and he repeatedly refused to hand over documents the committee had requested, citing legal privilege, before eventually backing down late in the day. Those documents landed with the committee on Monday but still haven’t been released publicly. There’s also a messy side story around law firm Ashurst. KPMG told parliamentarians, independent directors, and the public that Ashurst had conducted an independent review of the allegations — but senior Ashurst lawyers turned up at the inquiry on Friday and denied that ever happened. The firm’s independent directors have now publicly said they’ve lost trust in KPMG’s leadership. The committee chair, Labor Senator Deborah O’Neill — who first brought this to light by reading the whistleblower’s concerns into parliament back in March — called the evidence given by KPMG’s senior figures “truly shocking.” Going forward, KPMG says it will appoint its first ever independent chairman, restructure its governance, tighten whistleblower protections, and bring in an external advisor to do a lessons-learned review. Acting CEO Stan Stavros put on a brave face, insisting the scandal doesn’t define the firm’s 9,000 people or its nearly 700 partners. But with more than two billion dollars in annual fees on the line, there’s real anxiety inside the firm about how much of that business could now walk out the door.
David Jones has a new boss — and she’s got a clear message: stop trying to beat Mecca at beauty, and start making David Jones the place to go for fashion and luxury. Erica Berchtold, who previously ran The Iconic, has just been named CEO — the first woman to hold the role — replacing Scott Fyfe. She’s already told staff she didn’t take the job to sell the business, despite the rumours swirling around the 188-year-old retailer. The timing is tied to a fresh $200 million-plus loan from British lender Hilco Capital, which replaces an earlier arrangement with Gordon Brothers and Nomura. Part of the goal there is simply paying suppliers faster — something that’s caused real tension recently. Now for the numbers — they’re not pretty. David Jones posted a pre-tax loss of $95.5 million last financial year, up from a $74.1 million loss the year before. Two consecutive years in the red. But owner Anchorage Capital Partners, the private equity firm that bought the chain in 2023, is reportedly giving Berchtold time to turn things around. More than $250 million has already gone into store upgrades and a new app — including a $40 million Chatswood Chase store that opened late last year. Berchtold’s pitch? Better fashion, a proper digital luxury experience, and fixing the basics — like paying suppliers on time. She says that’s all coming within weeks. She’s also flagged that skipping the Christmas window displays last year was a mistake — and that the negativity around the brand has to stop. It’s a tough gig. US department stores like Saks Fifth Avenue and Barneys have gone under. But Berchtold says she’s here to redefine what a department store can be. Watch this space.
The Christian Brothers — one of Australia’s oldest Catholic orders — is effectively going broke, and thousands of abuse victims may never see the compensation they’re owed. The order has already paid out more than $480 million in abuse claims since 1980, but says the volume of settlements has become too much to handle. It’s now planning to sell off its remaining assets — including a property portfolio worth around $216 million — but that still won’t cover what it owes victims. Here’s where it gets complicated. Back in 2007, the Christian Brothers spun off their schools into a separate organisation called Edmund Rice Education Australia, which now runs dozens of prominent schools including Waverley College in Sydney and St Joseph’s Nudgee College in Brisbane. That organisation has nearly $345 million in cash and property assets approaching $3 billion. But it’s saying it’s a separate entity and has no legal obligation to help. Victims’ lawyers aren’t buying it. They’re arguing the schools were essentially built on the backs of the Brothers’ work — and that sheltering assets in a subsidiary shouldn’t be allowed. Australia’s Catholic Bishops have weighed in too, pointedly hoping the Brothers “find a way” to support victims — a polite but loaded message. And this isn’t the first time we’ve seen this play out. Catholic Church Insurance collapsed in similar circumstances two years ago. The big question now: can victims pierce that corporate veil and reach those school assets?
Energy Minister Chris Bowen has called in the competition and consumer watchdogs to investigate whether electricity retailers have been breaking the law. The allegation? That they’ve been quietly jacking up daily supply charges — those fixed fees you pay just to be connected to the grid — while the government has been telling everyone their power bills are going down this year. And we’re not talking small increases here. Some customers have seen their daily supply charge jump by as much as 86%. Now, to be fair, retailers say the charge per unit of electricity you actually use is falling at the same time — so for your average household, the overall bill might still be lower. But here’s the catch: if you’re a low-usage customer, maybe someone who’s retired, or has solar, you’re likely to end up worse off. So how did we get here? This is where it gets a bit technical. The regulator — the Australian Energy Regulator — changed the way it calculates the default “safety net” price this year. For the first time, it set separate caps on usage rates AND fixed supply charges, instead of just capping the total annual bill. The retailers say that forced them to restructure their pricing, and some passed those higher fixed charges on to customers. The government says that’s not good enough — if your underlying costs are falling, your customers’ bills should be falling too, full stop. There’s also a blame game happening between retailers and distributors — the companies that own the poles and wires. Ausgrid, for instance, says its network charges are going up around 10 to 11%, driven by the cost of building out renewables infrastructure. But some retailer supply charges are going up several times more than that. The broader frustration, as one energy analyst put it, is that the communication from both governments and retailers has been, and I’m quoting here, “very ordinary.” Consumers have been told prices are going down, then opened a letter saying their supply charge is nearly doubling. Even if the net effect isn’t that bad on average, that’s a pretty hard sell. The watchdogs are now looking into it — and this one is worth keeping an eye on.
And that’s it for this week.
And next week, I’ll be talking to Meredith Walsh, Meredith Walsh, founder of FlowJam Festival in the US about how 44% of Gen Z and Millennials are now actively choosing low or no-alcohol options at events, and consumers are increasingly paying for belonging, transformation, and intentional experiences over traditional nightlife culture. What’s especially interesting from a business perspective is that many of these alcohol-free and sponsor-light events are becoming surprisingly profitable.
And I’ll be talking to RMIT professor Sinclair Davidson about the rise of One Nation and whether that reflects people’s dissatisfaction with the state of the economy.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com or whatever your favourite podcast platform is.
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