PETER VAN ONSELEN: Which of these statements about the Australian economy is true? 1) Australia has won the war on inflation 2) Interest rates are too high 3) The country is run by a bunch of muppets

I used to enjoy a good muppet show as a kid, but the muppet show well see tomorrow when the latest inflation data gets revealed will be far less edifying.

Just watch as a conga line of Labor spin merchants seek to misrepresent whats released, falsifying the nature of the findings to demand a rate cut as soon as possible.

Prediction: the new monthly inflation figure will for the first time in a long time drop below three percent, probably somewhere around 2.7 to 2.9 percent.

Because that is technically within the Reserve Banks two to three percent target band, just watch as calls for an interest rate cut this side of the election grow.

The demand will come from partisan think tanks and politicians alike.

But all is not what it seems if you only listen to these hacks peddling their lines.

The inflation figure they will refer to is the headline result, not the underlying number.

Whats the difference? The headline figure can bounce around on the monthly results, whereas the underlying figure does not.

RBA Governor Michele Bullock will see through tomorrows headline inflation figure 

And that underlying figure will be higher than the top end of the Reserve Banks target range.

Hence why rates shouldnt come down: Because Australia continues to have a problem with high inflation.

The circus of clowns (or muppets) youll hear from in the media and on social media will ignore the impact of the energy rebate fiddle on the latest headline data.  They will also ignore the underlying figure if they think they can get away with it.

A headline inflation number artificial pushed down courtesy of carefully crafted energy rebates is worthless.

Dont take my word for it, thats what the head of the Reserve Bank, Michele Bullock, also says. 

Someone who examined the ins and outs of monetary policy in her postgraduate studies at the London School of Economics.

The underlying inflation figure strips away the volatile outlying numbers contained in the headline inflation rate, thereby giving us a truer reflection of what inflation really looks like at the moment.

Think of it this way. If we have a natural disaster diminishing food supplies such that the price of some products temporarily skyrockets, that will send the headline inflation figure north.

The underlying figure strips such temporary volatility away, to present a better indication of where inflation is really at.

It works by removing the top and bottom 15 percent of price changes, known as the trimmed mean.

The Reserve Bank looks at this figure only when deciding to raise or reduce interest rates. It doesnt pay attention to the headline number that can jump around courtesy of weather events or acts of political trickery.

But the muppet show will be on in earnest tomorrow anyway. The usual collection masquerading as independent economists will do their thing, spinning for the government.

And they will be joined by partisan politicians untrained in the finer art (or is it a science?) of economics, as they claim victory in the war against inflation.

But it is all just a deliberately false narrative, because the inflation figure that matters will still be too high.

The Treasurer, Jim Chalmers, will claim the new figure as a win, perhaps even suggesting his critics were wrong.

But hell also note that there is more work to be done, and this caveat is precisely why the Reserve Bank shouldnt cut rates anytime soon.

Because the true inflation problem remains, and once the energy rebate fiddle eventually ends, the headline figure will be pushed back up again, closer to the trimmed mean.

Treasurer Jim Chalmers will claim tomorrows inflation figure as a win

Thats because, as the Reserve Bank has pointed out, state and federal governments are spending too much. And with a federal election just around the corner thats unlikely to change.

The distorting spin coming out of partisan think tanks purporting expertise has become an inflation fuelling industry all on its own these days.

Filled with personnel who have little or no training in the fields they claim expertise in, and even less lived experience to go with it.

The real independent economists - the ones with PhDs and professorships unaligned to agenda driven organisations - will overwhelmingly see past this spin, and cautiously explain why Australia isnt in the same situation the United States is in right now.

Which is why their rates are coming down when ours are not.

And just watch tomorrow as these same muppets bemoan the fact that at todays Reserve Bank board meeting interest rates dont come down.

Their partisan catch cry tomorrow will be that they should have - with the false narrative that it was a missed opportunity by the Governor Michele Bullock.

What garbage this muppet show will be. Perhaps the ones I watched as a kid were garbage too, but as a child I simply didnt know any better.