As an authority of the economic state of the industry, Printing Industries manager of industry and commercial policy, Hagop Tchamkertenian is critical of the Reserve Bank’s decision to raise interest rates.

Tchamkertenian says, he understands the Reserve Bank’s need to manage inflationary pressure, but thinks, it would have been wiser to determine if one-off factors were responsible for the June quarter jump in inflation, before any decision was made.

“This rate hike is bad news for the printing and related industries. Business conditions are currently poor and now with interest rates rising once again, the industry can expect to feel a negative impact on trading in the next three to six months,” he says.

According to Tchamkertenian, factors in the economy such as the recent rise of commodity prices like fruit, and the increasing price of oil, are not appropriate reasons to burden businesses with the added worry of high interest rates.

“Comments about the impact of petrol and banana price increases being responsible for the rise in inflation, are not a good enough reason, when at least one of these factors, high banana prices, is likely to diminish significantly in coming months,” he says.

With the printing industry a ‘spanner in the works’ of a group of industries relying on the economic sustainability of each other, there is little doubt says Tchamkertenian, that any interest rate increases will have a negative impact on the industry.

“What makes our industry so vulnerable to interest rate rises, is the profile of industry sales. More than 70 per cent of printing industry sales are made to sectors of the economy that are either sensitive or very sensitive to movements in interest rates,” he explains.

The jump in interest rates is a quick reaction by the Bank to last week’s ABS data for the June 2006 quarter, which shows headline inflation running at 4 per cent.

At 4 per this represents a five year high if the GST impact on inflation is included and an eleven year high, if the one-off GST impact on prices is excluded from the figures.

The current interest rate hike of 0.25 percentage points to 6 per cent, is a six year high, with the increase representing the seventh consecutive increase.

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