Here are the leading business news items for today, covering key developments in inflation, corporate activities, legislative initiatives, and international ventures that shape the economic landscape in Australia.
Economists are warning that inflation in Australia remains high, challenging the Reserve Bank of Australia's policies. On Wednesday, the Australian Bureau of Statistics reported an annual inflation rate of 3.6% in April, a slight increase from 3.5% in March. This rise, driven by higher health insurance premiums and weather-affected fruit and vegetable prices, exceeded market expectations of 3.4%.
Despite this, volatility in monthly inflation measures and limited data collection may prevent an immediate change in interest rates. Headline inflation has been around 3.5% since December, with underlying inflation near 4%.
Betashares' chief economist David Bassanese commented, "The disinflationary process has stalled this year. Interest rates are likely to stay high, with no relief expected before Christmas. There's a risk the RBA might raise rates further to control demand-sensitive inflation."
Markets predict current rates will remain at 4.35% until May 2025, before a potential rate cut. Excluding volatile items like fruit and fuel, April's inflation was 4.1%, showing ongoing price pressures. Treasurer Jim Chalmers suggested quarterly data as a more reliable indicator due to monthly volatility.
Concerns remain that upcoming government rebates and tax cuts could increase spending and inflationary pressures, with health inflation surging to 6.1% – the highest since 2019. Housing inflation is also significant, with rent inflation at 7.5%. Food prices increased by 3.8% due to adverse weather conditions.
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Lendlease has announced plans to divest its international construction and property assets amidst growing investor pressure. The ASX-listed firm will sell its US East Coast construction business to Consigli Constructions, aiming to focus on its Australian operations. This follows a $4.5 billion plan and is expected to generate $2.8 billion, despite anticipated impairments of up to $1.5 billion by 2025.
Lendlease created a "capital release unit" to oversee the sell-off and plans to complete several major developments valued at $7.3 billion. Investors welcomed the strategic shift, boosting shares by 8%.
The Australian sharemarket’s rise boosts M&A activity. Since October, the market has gained 14%, resulting in increased M&A actions. JPMorgan’s data reveals early 2024 as the strongest period for M&A value, with Australia ranking fifth in the number of deals. Factors driving this include a weak Australian dollar, market consolidation, and advances in technology.
Potential M&A targets currently include companies like BlueScope, Challenger Ltd, and NextDC. Historical data suggest acquiring companies often underperform post-deal.
A NSW parliamentary committee has proposed major reforms in taxation and oversight of large consulting firms to curb their growing influence. The committee recommends treating these firms as "pseudo-corporations," taxing partner profits under state payroll tax.
These changes could impact Deloitte, EY, and KPMG significantly. NSW Treasurer Daniel Mookhey plans to cut annual consultant spending by $35 million and invest more in essential services. The federal government has already reduced consultant spending by $624 million this financial year.
NSW Greens MP Abigail Boyd criticised the big four consulting firms for their deep involvement in government services. The committee recommends clearer definitions and public disclosures of consultant spending.
Uarah Fisheries, an aquaculture farm in New South Wales, is exporting 50,000 golden perch fingerlings to China, responding to a growing demand for Australian fish. John Yu, managing director, noted China’s high demand for fish like golden perch due to its taste and fewer bones.
Logistics issues previously halted exports, but interest has surged with potential requests for up to 10 million fingerlings. Australia's seafood exports for 2024-25 are forecasted at $1.37 billion, with golden perch poised to join lucrative exports if production scales up.
Despite operational cuts and new loans, Hepburn Shire Council's draft 2024-25 budget projects a $2 million deficit. The council aims to find $4 million in permanent savings over three years. The Municipal Association of Victoria has called for revisions to the rate cap system, limiting councils' ability to raise funds.
Mayor Brian Hood cited high inflation and storm damage as major financial challenges. The proposed budget includes operational cuts, new borrowings, and staff reductions, with community consultations scheduled later this year.
Gold and oil prices have surged by 20% and 15% respectively in the last year, raising inflation concerns. The classic herbal liqueur Chartreuse is making a comeback, inspiring new Australian brands. Additionally, NGV's latest exhibit explores ancient Egyptian power dynamics.
Today's business news highlights significant economic moves, corporate activities, legislative proposals, and international ventures impacting Australia's standing in the global market. Stay updated with Business Australia News for more comprehensive insights and analysis.