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Top ASX dividend shares to buy in August 2022

Top ASX dividend shares to buy in August 2022

The hot debate igniting financial circles right now is whether ASX shares — and stock markets across the world — have reached the bottom. Could the bear finally be ready to hibernate for the rest of winter, or does it plan to skulk about into spring?

Regardless of which direction the bear takes, one thing’s for sure… inflation and interest rates are never far from the headlines. And, many are feeling the pinch of higher prices and mortgage payments.

With the cost of living biting into our bank balances, we asked our Foolish contributors which ASX dividend shares they reckon could make great buying right now for some potential passive income in the future.

7 best ASX dividend shares for August 2022 (smallest to largest)

Nick Scali Limited (ASX: NCK), $814.86 million

Codan Limited (ASX: CDA), $1.60 billion

Century Industrial REIT (ASX: CIP), $1.94 billion

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), $9.36 billion

Vanguard Australian Shares Index ETF (ASX:VAS), $11.20 billion

Woolworths Group Ltd (ASX: WOW), $46.15 billion

Westpac Banking Corp. (ASX: WBC), $78.71 billion

(Market capitalizations as of 11 August 2022)

Why our Foolish writers love these ASX dividend shares

Nick Scali Limited

What it does: Established more than 60 years ago, Nick Scali counts itself among Australia’s largest importers of quality furniture. The company imports more than 5,000 containers of furniture annually. In 2017 it expanded internationally to New Zealand.

By Bernd Struben: Nick Scali has a long track record as a reliable dividend payer. The furniture importer has made biannual dividend payments every year, dating back to 2014. It even paid out two dividends in the pandemic-addled year of 2020.

Up 42% since 17 June, the Nick Scali share price remains down 35% year to date. At the current price, the company pays a trailing dividend yield of 6.0%, fully franked.

This month, Jack Collopy, portfolio manager at Perpetual singled out the stock as one in which Perpetual recently increased its holdings. “Nick Scali is extremely well run, he has an excellent balance sheet, and we think the recent Plush acquisition will prove to be a great use of capital,” he said.

Motley Fool contributor Bernd Struben does not own shares of Nick Scali Limited.

Codan Limited

What it does: Codan manufacturers and supplies a broad range of products that leverage the company’s radio-frequency-focused intellectual property. These products can be divided into two main segments: communications equipment and metal detection equipment.

By Mitchell Lawler: The company behind the wildly popular Minelab metal detectors has an enviable record for revenue and earnings growth in recent years.

Since 2016, Codan has grown its 12-month trailing revenue from $140.6 million to nearly $500 million at the end of last year. Even more impressively, profits have rapidly expanded from a touch under $13 million to around $99 million over the same timeframe.

Despite a history of success, the Codan share price has been sold down 48% over the past year. At present, the communications company is producing a dividend yield of 3.3%. I believe now could represent a rare opportunity to buy Codan shares at a relative discount.

Motley Fool contributor Mitchell Lawler does not own shares of Codan Limited.

Century Industrial REIT

What it does: Centuria Industrial REIT owns $4 billion worth of industrial property, such as warehouses, across Australia. It has a particular focus on properties that are in short supply. For example, 38% of the company’s portfolio is based in Sydney, where the vacancy rate is just 0.3%.

By Tristan Harrison: At the end of FY22, the Centuria Industrial REIT portfolio had a weighted average lease expirary (WALE) of 8.3 years and an occupancy rate of 99%. I believe this gives investors good income visibility as well as security.

Management expects strong demand will lead to net operating income growth in FY23. It is also looking at value-add projects and is developing the company’s pipeline.

The Centuria Industrial REIT is expected to pay a distribution of 16 cents in FY23, which translates into a forward distribution yield of 5.4% after a 25% fall in the share price since 29 April 2022. I think the stock looks undervalued at around $3.

Motley Fool contributor Tristan Harrison does not own shares of Centuria Industrial REIT.

Washington H. Soul Pattinson and Co. Ltd

What it does: Commonly referred to as Soul Patts, the Australian-based investment house holds a diverse portfolio of assets across a range of industries. The company has been listed on the ASX since 1903 and has consistently paid dividends to shareholders.

By Aaron Teboneras: I believe the Soul Patts share price offers an attractive opportunity for investors to buy in at the current price.

After slumping to a 20-month low of $22.52 in late June, shares in the investment company have climbed by almost 8% over the past month to close on Thursday at $25.93. But having reached as high as $40 back in October last year, I believe the Sol Patts share price has the potential to continue its March higher.

In addition, Soul Patts has made a habit of increasing its final dividend by 1 cent each year since 2012. In FY21, the board declared a dividend of 36 cents per share.

With this in mind, history would suggest that the upcoming final dividend could be bumped up to 37 cents.

Keep a lookout next month as Soul Patts is scheduled to report its FY22 earnings results on 22 September.

Motley Fool contributor Aaron Teboneras does not own shares of Washington H. Soul Pattinson & Co. Ltd.

Vanguard Australian Shares Index ETF

What it does: VAS is an exchange-traded fund (ETF) that tracks the S&P/ASX 300 Index (ASX:XKO). It is the most popular index fund and ETF on the ASX.

By Sebastian Bowen: This ETF from Vanguard is not a flashy investment. VAS is a simple index fund that holds the largest 300 shares on the ASX by market capitalisation. Like most index funds, the largest companies on the ASX make up the lion’s share of the VAS portfolio. And since most of the largest shares on the ASX pay out regular dividends, so does this ETF.

Investors enjoy quarterly distributions from VAS. Its last four payments amounted to approximately $6.26 per unit. That gives investors a trailing yield of approximately 7.12% on recent pricing. For its diversification, ‘bottom drawer’ appeal and hefty yield, I think VAS is well worth considering for dividend investors this August.

Motley Fool contributor Sebastian Bowen does not own shares of the Vanguard Australian Shares Index ETF.

Woolworths Group Ltd

What it does: Woolworths is the conglomerate behind the eponymous supermarket chain. In addition, it owns Big W, Countdown, and the Everyday Rewards loyalty program.

By James Mickleboro: I think Woolworths shares could be a top option for income investors this month. This is because the retail giant is a rare example of a company that can actually benefit from inflation. Especially if it can pass through its higher costs effectively.

The team at Goldman Sachs expects this to be the case and is forecasting a sales compound annual growth rate (CAGR) of 6.6% and underlying net profit after tax (NPAT) of 14.1% over FY22 to FY24.

Goldman expects this to lead to fully-franked dividends per share of 96 cents in FY22 and $1.18 in FY23. Based on the current Woolworths share price of $38.02, this will mean yields of 2.5% and 3.1%, respectively.

Motley Fool contributor James Mickleboro does not own shares of Woolworths Group Ltd.

Westpac Banking Corp.

What it does: As Australia’s oldest bank, and one of its largest, Westpac provides consumer, business, and institutional banking services.

By Brooke Cooper: The Westpac share price has underperformed the market over 2022 so far, gaining around 5% year to date, but brokers are still bullish on its future.

Goldman Sachs believes the stock “offers the most upside of the banks”. Meanwhile, both Morgan Stanley and Goldman Sachs expect the bank to up its dividends over the coming years.

They’ve respectively tipped Westpac’s dividends to rise to $1.30 and $1.35 in FY23. For context, the bank gave shareholders $1.18 in dividends in FY21.

Motley Fool contributor Brooke Cooper does not own shares of Westpac Banking Corp.

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Wall Street wobbles as inflation rally dissolves

Wall Street wobbles as inflation rally dissolves

The Australian sharemarket is 0.5 per cent lower at 7040.2 before noon after an afternoon swoon saw Wall Street finish its session lower.

Energy is the only sector in the black with the property, tech, health and consumer discretionary sectors all down more than one per cent.

Wall Street's early rally dissolved by the afternoon.

Wall Street’s early rally dissolved by the afternoon.Credit:Bloomberg

Shares in insurance giant IAG are 1 per cent higher after it reported its results while ResMed shares are 2 per cent lower after releasing its results in the US overnight.

The S&P 500 closed 0.1 per cent lower after having been up 1.1 per cent in the early going. The Nasdaq fell 0.6 per cent, while the Dow Jones Industrial Average eked out a 0.1 per cent gain.

The indexes got a big boost early on following a report showing inflation at the wholesale level slowed more than economists expected last month. The report, which came a day after a cooler-than-expected reading on inflation at the consumer level, bolstered hopes among investors that inflation may be close to a peak and that the Federal Reserve will be less aggressive about raising interest rates than feared.

Even so, the morning rally didn’t hold. The selling coincided with a sharp upward move in bond yields and rising energy prices, which have been a central component of higher inflation.

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“People stepped back and the inflation outlook isn’t that much different than what it was before,” said Willie Delwiche, investment strategist at All Star Charts. “There’s still a lot of work for the Fed to do. Maybe a little bit too much short-term euphoria kind of got in the market.”

Some Fed officials also made comments after Wednesday’s inflation report suggesting their battle against rising prices is far from over.

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Southern Renewable Energy Zone to be connected to national electricity market

Wind farm turbines under an overcast sky

The answer to cheaper and cleaner energy has been blowing in the wind for years — and finally the federal government has realized, green energy advocates say.

This week’s announcement that the federal government will foot the bill to connect the Southern Renewable Energy Zone to the national electricity market is historic, according to the Queensland Conservation Council.

“We’re finally seeing some clarity from government on the fact that we are transitioning to renewables,” council director Dave Copeman said.

“For too long, it was a political football. And that just meant there was no certainty for investors.”

Mr Copeman said that “lack of certainty” had hurt Queenslanders in the hip pocket.

“Our power bills have gone up… but this decision says the future of power will be cleaner and cheaper,” he said.

“There’s no fuel price for wind or solar, it doesn’t go up and down when you have international crises.

“It just gets cheaper and cheaper the more you build.”

The Macintyre wind farm precinct, which is one of two projects in the Southern Renewable Energy Zone, is expected to be operational on the Southern Downs in 2024.

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Play Video. Duration: 1 minute 36 seconds

Construction of MacIntyre Wind Precinct kicks off in Queensland.(Supplied: ACCIONA Energy)

Nail in the coffin for fossil fuels?

Not too far from the Southern Renewable Energy Zone is the town of Acland, home to the New Acland Coal Mine.

Owners of the mine are hoping to expand its operation.

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High-profile law firms investigate F45 after horror trading update

High-profile law firms investigate F45 after horror trading update

But during the July trading update, investors learned that credit line would not be available.

Revenue guidance was downgraded by 53 per cent and full-year earnings guidance was slashed by 71 per cent. The company pointed to worsening economic conditions as the reason for reining in operational expenses and prioritizing profitability.

Mr Gilchrist, who held about $US371 million worth of shares at the time of the much-hyped IPO, also revealed he had resigned as chief executive officer and chairman a month before the July trading update. Actor Mark Wahlberg cashed out $US12.2 million in April.

Mr Gilchrist, not to be confused with the cricketer, was paid out $US7 million, while 110 people were laid off from the business.

Following the poor F45 news, Mr Gilchrist put his $14 million house in Freshwater on Sydney’s northern beaches up for auction.

He also runs two rugby union teams based in Los Angeles, California, and Austin, Texas. The teams are named the LA Giltinis, a combination of Mr Gilchrist’s own name and a martini drink he planned to bring to market, and the Austin Gilgronis, a similar portmanteau relating to Negronis.

The four law firms hoping to represent aggrieved investors in the series of class actions are The Portnoy Law Firm, The Schall Law Firm in Los Angeles, and Faruqi & Faruqi and Brager Eagel & Squire in New York City.

The aim is to examine whether F45 may have breached federal securities law.

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McDonald’s sued for allegedly denying paid breaks

McDonald's sued for allegedly denying paid breaks

McDonald’s is facing a fresh legal battle launched by the fast food workers union for allegedly refusing to grant entitled rest breaks to 250,000 employees across Australia.

Workers across nearly 1000 current and former McDonald’s locations were allegedly not informed of their rest break entitlements. Some workers were allegedly offered free soft drinks or short toilet breaks instead of their entitled 10-minute break.

The legal claim seeks $250 million in compensation plus penalties against 400 McDonald's operators.

The legal claim seeks $250 million in compensation plus penalties against 400 McDonald’s operators.Credit:Luis Enrique Ascuí

Shop, Distributive and Allied Employees Association (SDA) secretary Gerard Dwyer said the union had tried to address the issue with the fast-food franchise, but that it had refused to admit any wrongdoing.

“It’s simply not believable that these breaks weren’t denied on purpose,” Dwyer said. “McDonald’s shouldn’t have to be dragged through the Federal Court for workers to receive their most basic entitlements.”

The legal claim seeks $250 million in compensation plus penalties against 400 McDonald’s operators. It is the 16th in a string of other existing Federal Court claims the union has against McDonald’s and 14 franchisees.

Workers covered under the Fast Food Award are entitled to an uninterrupted 10-minute paid break when working four or more hours.

In a statement, McDonald’s said it highly valued its employees and their contribution to the success of the company, and it intended to fully defend the claim.

“McDonald’s believes its restaurants complied with applicable instruments, provided rest breaks to employees and were consistent with historic working arrangements,” the company said in a statement.

“Those arrangements have been known to the SDA for many years. The manner of taking breaks has not been challenged or raised by the SDA as a matter of concern throughout successive enterprise bargaining processes for new industrial agreements.

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Drivers warn Australians about the MG3: ‘Deserves to be in hell’

Straight-talking Aussies have unleashed on a car currently taking the country by storm as one driver describes the vehicle as a 'truly hateful car' (pictured, the MG3 Excite in white)

Straight-talking Aussies have unleashed on the MG3, a Chinese-made car that’s soaring up the sales chart across the country.

Normm Jean wrote a scathing review of the MG3, which can be purchased for $18,990 drive-away, making it the cheapest new car in the country.

MG made its debut as one of Australia’s highest-selling marques in March 2022 and has kept its place in the top 10 thanks to big sales of all three of its models – including the MG3, the best-selling vehicle in its segment.

The vehicle comes in three specifications, the Core priced at $18,990, the Core with navigation at $19,400 and the Excite, which has a price tag of $20,490.

He said he had been ‘unfortunate’ enough to take the Excite model for a spin and that he soon found he and the car were incompatible.

Straight-talking Aussies have unleashed on a car currently taking the country by storm as one driver describes the vehicle as a 'truly hateful car' (pictured, the MG3 Excite in white)

Straight-talking Aussies have unleashed on a car currently taking the country by storm as one driver describes the vehicle as a ‘truly hateful car’ (pictured, the MG3 Excite in white)

One MG3 owner described it as a 'truly hateful car' and said people were better off buying a second-hand car. Pictured is a stock image of a man driving a car

One MG3 owner described it as a ‘truly hateful car’ and said people were better off buying a second-hand car. Pictured is a stock image of a man driving a car

‘The salesperson told me she didn’t think I would like it when she gave me the keys to the demo Excite model, so we were starting off good,’ he said.

Mr Jean explained he was around 177cm tall and ‘not a giant’, but struggled to find a comfortable position in the hatchback.

‘Not to mention the rattles that a car with 50 km shouldn’t have,’ he said.

The car enthusiast complained there was only one cup holder, no digital speedometer, and the sun-visors were too small.

‘The plastic on the A-Pillar is so poorly fitting that it doesn’t like up with the windscreen properly,’ he said.

He said that in 2019 the MG3 Excite was selling for $17,490 drive away.

‘The exact car is now $20,490. It hasn’t been updated, or refreshed. It’s just had its price hiked up. I told my friend it was a sh*t heap and went back to the dealer.

For most of its history, MG was associated with British open-top roadsters but that changed with the collapse of Rover in 2005, which saw the Chinese state-owned SAIC group take over (pictured is Scottish actor Ewan McGregor with a classic MGA from 1962 )

For most of its history, MG was associated with British open-top roadsters but that changed with the collapse of Rover in 2005, which saw the Chinese state-owned SAIC group take over (pictured is Scottish actor Ewan McGregor with a classic MGA from 1962 )

‘In conclusion, if the MG3 was $12,990 drive away, I would absolutely buy one. Because it’s so cheap, who cares?

‘Drive the wheels off it, and send it to the wreckers when it’s stuffed. But there is no way on earth that I would spend $21,000 on this car.’

Mr Jean told Daily Mail Australia the car’s popularity was down to the reputation MG earned in the 1960s as the makers of a classic English sports car.

For most of its history, MG – also known as Morris Garages – was associated with British open-top roadsters, but that changed with the collapse of Rover in 2005, which saw the Chinese state-owned SAIC group take over.

Since then, MG has become synonymous with budget SUVs and hatches made in China – a far cry from its 1924 origins as a sports car badge.

‘It’s based on the badge,’ he said.

‘If you take the MG badge off them, they are just a cheap Chinese-made car that’s similar to a 2004 Hyundai Getz.’

‘The 1.5 engine and 4-speed car deserves to be in hell. It’s slow, and I mean slow. I can only compare it to a 1.2 Kia Picanto, but even that felt better.

‘But by far the worst thing for me, I couldn’t get the seat to lower, nor could I get the steering wheel to go high enough for me to get even remotely comfortable.’

Normm Jean has issued a scathing review of the MG3 Excite (seen here in blue), which can be purchased for $20,490 drive-away to Facebook page 'S*** Cars of Australia'

Normm Jean has issued a scathing review of the MG3 Excite (seen here in blue), which can be purchased for $20,490 drive-away to Facebook page ‘S*** Cars of Australia’

Another motorist who asked to remain anonymous, described the MG3 Excite as a ‘truly hateful car’ and said people were better off buying a second-hand car.

‘There is a place for these types of cars, for people who want to get from A to B and don’t really care for a car or a brand,’ he said.

‘However, to charge $21,000 for a car of this quality, you would be better off buying a second-hand Corolla, Yaris or Mazda 2.

‘They are what I feel a very expensive disposable car that has been disguised as something cheap and cheerful.’

MG has previously said buyers also didn't care that it was Chinese owned and Chinese built - and that sales are soaring accrross the country because the vehicle has a seven year unlimited kilometre warranty

MG has previously said buyers also didn’t care that it was Chinese owned and Chinese built – and that sales are soaring accrross the country because the vehicle has a seven year unlimited kilometre warranty

An MG spokesperson told Daily Mail Australia that in becoming the number-one seller in the segment, it has beaten its new vehicle rivals.

‘The continued popularity of the MG3 is testament to how many Australians have found this model to suit their needs both in style and performance,’ they said.

‘Additionally, for peace of mind, the MG comes with a comprehensive seven-year unlimited kilometer warranty and access to more than 100 dealers around Australia and New Zealand.’

Danny Lenartic, MG's general manager of electric vehicles in Australia and New Zealand expects the marque to become a big part of Australia's automotive future

Danny Lenartic, MG’s general manager of electric vehicles in Australia and New Zealand expects the marque to become a big part of Australia’s automotive future

Earlier in the year, Danny Lenartic, MG Motor’s general manager of electric vehicles in Australia and New Zealand, told Daily Mail Australia he expects the mark to be a big part of Australia’s automotive future.

Mr Lenartic said buyers also didn’t care that it was Chinese-owned and Chinese-built despite Communist President Xi Jinping’s trade sanctions against Australia.

‘Country of origin to me today isn’t as important as the core values ​​that the people behind the brand stand for,’ he said.

‘The MG history has always been a value brand, so it’s always been the affordable sports car, that’s how it gained its popularity.

‘Realistically, the core values ​​of MG haven’t changed – for me, we’ve held on to that identity.’

KEY FEATURES OF THE MG3

The MG3 Auto offers value, personality and most importantly, style.

It comes in three specifications:

MG MG3 AUTO CORE – FROM $18,990 DRIVEAWAY

• 15″ Alloy wheels

• Rear parking sensor

• Rear view camera

• LED ‘London Eye’ daytime running lights

• 4 Speaker audio system w/ Yamaha 3D Sound Field

• Leather trimmed steering wheel with contrast stitching

• Tartan fabric trim seating

• 1.5l engine

• 8” color infotainment screen with Apple CarPlay™

MG MG3 AUTO CORE WITH NAV – FROM $19,490 DRIVEAWAY

KEY FEATURES IN ADDITION TO MG MG3 AUTO CORE:

• Satellite Navigation

MG MG3 AUTO EXCITE – FROM $20,490 DRIVEAWAY

KEY FEATURES IN ADDITION TO MG MG3 AUTO CORE WITH NAV:

• 16” Two-tone machined alloy wheels

• Body color door mirrors with integrated turn signal

• 6 Speaker audio system w/ Yamaha 3D Sound Field

• Rear spoiler

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Elon Musk says Tesla Semi electric truck deliveries will begin this year

Elon Musk says Tesla Semi electric truck deliveries will begin this year

After three years of delays and broken promises, Tesla claims its Semi electric truck will finally be delivered to US customers from later this year.

Jordan Mulach
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Tesla CEO Elon Musk claims the electric-car giant will finally deliver its Semi truck to US customers before the end of 2022 – three years later than originally promised.

Order books for the Semi are open for US buyers, with Tesla requiring customers to place a $US20,000 ($AU28,300) deposit to secure a place in the queue.

Tesla’s first commercial vehicle has a claimed driving range of 500 miles (805km) when empty in its top-of-the-range variant, which is priced from $US180,000 ($AU255,000) plus on-road costs.

A less-expensive variant is also offered, priced from $US150,000 ($AU212,000) plus on-road costs with a shortened claimed driving range of 300 miles (482km).

Powered by four electric motors which drive the rear wheels, Tesla claims the Semi can accelerate from zero to 100km/h in five seconds when it is unladen.

With a full payload of 36,287kg, the Tesla Semi can allegedly achieve a zero to 100km/h time of 20 seconds, while reaching 60mph (97km/h) up to five per cent grade.

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While it is unclear if the Tesla Semi will be sold in Australia, the electric truck features a centrally-mounted driver’s seat – making it ambidextrous, unlike the currently left-hand-drive Cybertruck.

However, the Tesla Semi’s width might prevent it from being legal on Australian roads.

Australia only allows trucks which are up to 2.5 meters wide, while Tesla has said the Semi is between 30 and 50 millimeters wider than this limit.

Jordan Mulach

Jordan Mulach is Canberra/Ngunnawal born, currently residing in Brisbane/Turrbal. Joining the Drive team in 2022, Jordan has previously worked for Auto Action, MotorsportM8, The Supercars Collective and TouringCarTimes, WhichCar, Wheels, Motor and Street Machine. Jordan is a self-described iRacing addict and can be found on weekends either behind the wheel of his Octavia RS or swearing at his ZH Fairlane.

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Metcash tells IGA, Foodland supermarket owners not to increase prices

Metcash tells IGA, Foodland supermarket owners not to increase prices

IGA and Foodland supermarket owners have been told by Metcash, the company that runs the network, not to increase shelf prices as inflation soars because it will actually make them less money.

It is concerned pushing up prices will see customers ditch the independent retailers for Coles and Woolworths after fading IGA sales made a comeback during the pandemic.

Metcash told news.com.au the plan is for its supermarket retailers to grow their gross profit through volume growth by providing customers a “differentiated offer”, which includes competitive prices.

“That is, if prices are not competitive they could lose sales and gross profit,” a spokesman said.

He said the differentiated offer of the IGA network was “the convenience of local shopping, wide ranges tailored to the local community and with the brands they want, together with friendly local service”.

The direction to supermarket operators was more blunt, with a slide in a presentation at their national conference last month stating: “Don’t increase shelf prices – this will reduce gross profit dollars”.

In the presentation, obtained by Australiansupermarket owners were told there were “lots of ways to improve margin and bank more gross profit dollars but none of them involve putting prices up”.

At a grocery and food suppliers forum on Wednesday suppliers were told if the supermarkets lifted shelf prices their gains in improving competitiveness in recent years would be put at risk, reported Australian.

According to Metcash’s FY22 full year results, supermarket food sales over the past two years rose 13.8 per cent.

Like-for-like sales in the IGA network increased 14.6 per cent over the two years, with Metcash attributing the growth to “continued support from shoppers rediscovering the convenience of local neighborhood shopping and the improved competitiveness of the network”.

The pandemic helped IGA make a comeback, with figures showing sales had actually declined in the two years before 2020.

A Metcash spokesman told news.com.au as a wholesaler the company accepted price increases.

“Our position has always been consistent: where suppliers put forward legitimate reasons for increases we accept them,” he said.
“However, our focus continues to be on keeping our retailers at least as competitive in the market, even after the change takes effect.”

Metcash’s advice to not increase shelf prices comes as many retailers, including the major supermarkets, hike up prices.

A fortnight ago Aldi, famous for having low grocery prices, warned price increases were inevitable.

Aldi customer interactions director Adrian Christie told the Australian Financial Review: “Some grocery prices will inevitably increase in the months ahead, but we want to reinforce our commitment to customers that we will maintain our price leadership relative to our competitors.”

The comments came as Australia’s inflation rate hit 6.1 per cent – ​​the highest since December 1990.

The new figures from the Australian Bureau of Statistics for the June quarter showed the cost of fruit and vegetables was up to a whopping 7.3 per cent from last year and 5.8 per cent from the previous quarter.

The price of meat, seafood, bread and cereal products rose 6.3 per cent, while the cost of non-alcoholic beverages rose 7.9 per cent.

The ABS said these changes reflect “a range of price pressures including supply chain disruptions and increased transport and input costs.”

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Ross Gittins: Australia’s hidden inflation problem

Ross Gittins: Australia's hidden inflation problem

As for the cyclical-versus-structural distinction, it’s relevant because, as Lowe never tires of reminding us, monetary policy is capable of dealing only with cyclical problems. Its role is to smooth the ups and downs in demand as the economy moves through the business cycle.

But here’s the problem:

In particular, employees and their unions now have less power to insist on wage rises sufficient to keep up with price rises than they did when last we had a big inflation problem. But big business now has more power to raise its prices.

Credit:Illustration: Matt Davidson

Partly because globalization has moved much manufacturing from the high-wage advanced economies to China and other low-wage economies, and partly because of the decentralization and deregulation of wage-fixing and the decline in union membership, most workers pretty much have to accept whatever inadequate pay rise their chief executive (or premier) chooses to give them.

This is why all the concern about inflation expectations becoming “unanchored” is so silly. Businesses have the power to act on their expectations of higher inflation, but workers no longer do.

This is why the rate of unemployment can fall far below what economists, using data going back decades, estimate to be the NAIRU – “non-accelerating-inflation” rate of unemployment – without wage inflation accelerating.

In concentrated markets, firms can also easily see the effects on their few competitors, and they can watch and follow each other’s behaviour. They are confident that none will break ranks on price rises because there are benefits to be had by all.

When thinking about inflation, macroeconomists – including Lowe, I suspect – often assume our markets are competitive, and that the markets for all goods and services are equally competitive.

But as Rod Sims, former chair of the Australian Competition and Consumer Commission, and now a professor at the Australian National University, has written, markets in Australia are generally far from strongly competitive.

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“Many sectors … are dominated by just a few firms – think beer, groceries, energy and telecommunications retailing, resources, elements of the digital economy, banking and many others,” Sims says.

“This means the dominant firms have some degree of market power. That is, they can set prices at higher levels knowing competitors are unlikely to undercut them and take market share from them.

“When there is high inflation, dominant firms often realize they can increase prices above any cost rises because consumers will be more accepting of this. They will often do this subtly over time.”

In concentrated markets, firms can also easily see the effects on their few competitors, and they can watch and follow each other’s behaviour. They are confident that none will break ranks on price rises because there are benefits to be had by all.

Firms with market and pricing power are also less likely to restrain prices in response to interest rate rises, Sims says. This is because it’s not competition, but dominant-firm behaviour, that’s driving pricing decisions.

As well, market power is usually associated with reduced production capacity. How often do we see reductions in combined capacity following a merger of two competitors? When demand increases, there’s then less capacity available to serve it, so we see prices rise more than they otherwise would have.

Interest rates can only do so much to fight against inflation.

Interest rates can only do so much to fight against inflation. Credit:Louie Douvis

What all this means is that it may take longer for interest rates to work to slow inflation, so patience may be needed rather than further increases. And, Sims says, there could be a role for publicly exposing high margins, to put pressure on to reduce them.

Another point he makes is this inflation owes much to price shocks in the key, highly regulated gas and electricity industries. In these cases, the best answer is to make their regulations more anti-inflationary, not just jack up interest rates further.

The micro-economic reforms of the Hawke-Keating government have made our economy much less inflation-prone than it was in the days when inflation was last a major problem.

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Meanwhile, however, we’ve allowed the pricing power of big firms to grow as successive governments of both colors have resisted pressure from people like Sims to tighten our merger law, and state governments have maximized the sale price of their electricity businesses by selling them to business interests intent on turning the national electricity market into a three-firm vertically integrated oligopoly. Well done, guys.

Ross Gittins is the economics editor

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Aussie-built electric ute on the cards thanks to startup

Aussie-built electric ute on the cards thanks to startup

A sketch of Roev's electric ute.

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A sketch of Roev’s electric ute.

High-volume Australian-built vehicles may soon be back on the menu thanks to a new startup aiming to introduce a new electric ute to the market.

Roev (pronounced ‘rove’) wants its finished product on the market by around 2026, having worked on the ute for the past three years.

A design sketch of the ute shows a sleek single-cab design with a cab-chassis tray over the back with a bulging bonnet, LED headlights and slim glasshouse. It will likely feature Roev’s in-house electricals, which it already uses to convert Ford Rangers and Toyota Hiluxes.

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At the moment, those use a single electric motor powering both 4×2 and 4×4 variants, with either a 70kWh or 100kWh (lithium-iron phosphate) battery pack available. The larger will offer up to 300km of range, something Roev believes will be suitable for many fleets. Four-wheel drive vehicles will retain their standard transfer case while the transmission will be a simple reduction gear.

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The electrical system will initially be 400 volts – the standard used in most EVs – and will support DC fast-charging capability. Roev will pull its batteries from overseas suppliers at first, before eventually using Australian-made batteries.

Roev wants to convert Hiluxes and Rangers while he readies his own ute.

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Roev wants to convert Hiluxes and Rangers while he readies his own ute.

It will also support bi-directional charging, helped by Roev’s history in software.

“EV utes are a great start, but the biggest impact will come from running them efficiently with renewable energy and the ability to store and redistribute that energy from their batteries,” CEO Noah Wasmer, a former executive with software giant Atlassian told carsales.

“We see the future of vehicle depots as DC micro-grids, and by testing our V2G technology and EV management software, we can show that it can be done without impacting the driving performance or range requirements for electric vehicles.”

Roev's electric ute will be able to feed energy back into houses or the grid itself.

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Roev’s electric ute will be able to feed energy back into houses or the grid itself.

According to the publication, Roev isn’t currently interested in producing hundreds of thousands of vehicles just yet. Instead, it wants to build “micro-factories” that operate profitably on as few as 10,000 vehicles annually.

“If you told me we had such amazing success that we need to build millions of vehicles I’ll tell you that we’re not architected right to build millions of vehicles,” said Wasmer.

Roev isn’t ready to talk pricing or availability just yet, aside from that 2026 goal. There’s also a good chance the specifications will change by the time Roev is ready for production.