Posted to Letters to the Editor, Monash Weekly on 5/2/2010
Title: My Rational Economic Analysis
The RBA Governor, statisticians, economies and bankers alike should go back to school to learn critical thinking and mathematical analysis. The December 09 retail sales are indeed better than forecast, and NOT as bad as these ignorant people try to make us believe.
Many departmental stores and non-food outlets were concerned about the economic downturn, and attempted to have sales before Christmas. As a result, the item unit prices were lowered, and therefore more sales volumes must be generated to compensate the eventual sales value.
For example, if a $100-item is sold at 20% discount, it is required to sell 1.25 (i.e. $100/$80) items to achieve $100, or an increase of 25% sales volume. With only 0.7% drop in sales value, or $99.93, the number of units sold is 1.2496 (i.e. $99.93/$80), or close to 25% increase in volume.
In general, cafes, and food outlets don't drop prices, and that explains the increase in sales revenue. If the retailers in question were game enough not to drop their pries during the peak season, they would have made hefty profits.
In short, these gurus' interpretations are just nonsensical!
