They’d just heard from Comsuper that for the first time they would be getting no half yearly increase in their CSS and PSS pension payments because inflation was too low.
The letter told them "the Australian Bureau of Statistics has recently announced that there was no upward movement in the Consumer Price Index over the six months from September 2006 to March 2007"...
The Finance Minister has confirmed that the Comsuper decision is correct.
Since 2002 pensions have been adjusted half-yearly instead of annually in a move welcomed by beneficiaries.
Until this year there has never been a negative half-yearly rate of inflation.
But in the six months to March this year the freak combination of lower banana and petrol prices helped push the CPI down by 0.01 per cent.
Before then prices were moving strongly. December’s six monthly review pushed up the pension payments by an impressive 2.5 per cent.
The way that prices have taken off since March suggests that next December’s pension increase will be healthy as well.
But in the six months to March used to calculate the June increase measured prices fell. (This does not mean that the pension payments will fall – they can’t be adjusted down.)
A spokesman for the Minister Nick Minchin said yesterday that it had always been recognised that moving from annual to half-yearly adjustments would make the movements more volatile.
And he said that he could understand why many people might not believe that prices actually fell in the six months to March. It was human nature to notice petrol prices when they rose, but not when they fell and to remember when the price of bananas became ridiculously expensive but not when it returned to earth.
In the three months to March the price of food is said to have fallen by 2.3 per cent, the price of clothing by 0.4 per cent and the price of household contents and services by 0.9 per cent.
Surveys by the Australian Bureau of Statistics had confirmed that the consumer price index moves pretty much in line with a separately calculated index of the prices of goods and services bought by retirees.
It might be of further consolation to recipients of Commonwealth and Public Sector Superannuation pensions to know that if they are entitled to seniors benefits cards they will have just received a timely $500 bonus from the government distributed as part of the Budget.
It’ll be a darker consolation to know that the Reserve Bank is so worried about the strength of inflation down the track that on Wednesday week it is likely to push up interest rates in an attempt to hold it at bay.
The Reserve Bank isn’t expecting a zero rate of inflation again any time soon.
