Inflation gauge rises 0.3% in December: Economy Roundup

A private indicator of inflation has now risen for a second consecutive month, indicating price pressures – and interest rate rises – are set to continue over 2010.

The TD Securities-Melbourne Institute gauge of price inflation rose by 0.3% in December, following a 0.3% rise in November. The annual pace of inflation rose to 2.6% from 2.1% per month.

While this is within the RBA’s 2-3% target, it has risen significantly from the October reading of 1.2%.

“After a period of clear disinflation over the year from mid-2008, inflation has now not only bottomed out, but early signals suggest some emerging upside pressure,” TD senior strategist Annette Beacher wrote in a statement. “This shift justifies the recent rapid-fire adjustment to the cash rate from the RBA.”

The gauge found petrol prices, travel and accommodation, fruit and vegetables and automotive fuel contributed most to the price rises, while these were offset by rental accommodation, financial services, along with books, newspapers and magazines.

The gauge found excluding volatile items, the index rose by 1.9% for the year.

Meanwhile, the Australian sharemarket has opened lower this morning after Wall Street stocks fell on Friday afternoon, along with a drop in commodity prices.

The benchmark S&P/ASX200 index was down 12 points or 0.26% to 4886.9 at 12.00 AEST, while the Australian dollar lost some ground to US92c.

ANZ shares rose 2.4% to $22.97, while Commonwealth Bank shares also gained 0.3% to $58.27. Westpac gained 0.4% to $25.61, as NAB rose 0.7% to $27.48.

Lihir Gold chief executive steps down

Lihir Gold chief executive Arthur Hood has resigned his position, and will be replaced by chief financial officer Phil Baker while the company searches for a replacement.

The company said in a statement to the ASX Hood had achieved his goal of overseeing Lihir transform to a multi-mine producer.

“[Mr Hood] built a strong management team to take the company forward into its next phase of growth, and under his stewardship the group’s financial position has been significantly enhanced,” chairman Ross Garnaut said.

New official data shows the value of exports has grown by 22% to $283.8 billion during 2008-09, when compared with the previous financial year. Tasmania and South Australia were the only two states not to record increases.

Western Australia recorded a 24% increase due to the demand for iron ore and gold, with Queensland recording the largest rise at 48.3% due to coal prices. Falling car sales saw exports in South Australia drop by 6.4%, with poor Tasmanian aluminium and zinc sales resulting in a 4.3% decrease.

Meanwhile, Viterra has now appointed Rob Gordon as senior-vice president and president of South-East Asia.

“[Mr Gordon] has over 25 years of progressively senior strategic and operational management experience and in that time has demonstrated a wealth of innovation in the food industry,” chief operating officer Fran Malecha said in a statement.

“We are confident he will provide leadership in working with our senior management team to drive strong operating performance and profitable growth in the region.”

Cadbury faces bids from Kraft, Hershey

Overseas, Cadbury is now facing a bid from American food groups Kraft, while American confectionary rival Hershey considers an offer of its own this week. Kraft has a deadline of midnight Tuesday to increase its current offer, which values the company at 771p per share – below last Friday’s closing price of 793.5p.

Chief executive of US-based Franklin Mutual Advisors, the biggest shareholder in Cadbury, told reporters the current offer was unacceptable.

“It materially undervalues Cadbury in our view, and I think just about everyone’s,” he said. “The owners of the company aren’t forced sellers. If there’s no deal, there’s no deal.”

In the US, JPMorgan Chase & Co has reported losses on mortgage and credit loans in the fourth quarter, fuelling investor disappointment despite a profit rise to $US3.3 billion.

“Consumer credit may be close to a bottom here, but it’s not getting better, and people wanted JPMorgan to say it’s getting better,” Ralph Cole, portfolio manager at Ferguson Wellman Capital Management, told Reuters.

The result comes ahead of a turbulent week for Wall Street, with results from tech group IBM and financial giant Goldman Sachs expected to boost the market.