Are you feeling the pinch? Australia's inflation reaches 32-Year-High, signalling potential interest rate rise
- Replies 5
Many of us have been feeling the pinch of the rising costs of living, with the prices of basic commodities reaching all-time high prices.
And while many of us are hoping for some relief, it seems like those who are dealing with a tight budget will have to face further financial instability.
The Australian Bureau of Statistics (ABS) has reported that the cost of living crisis in the country has hit a new high, with inflation surging to 7.8 per cent in the December quarter of 2022. .
The ABS claimed that the figure marks the fastest annual pace of inflation since the March quarter of 1990 and well above the Reserve Bank of Australia’s (RBA) 2 to 3 per cent target.
ABS researchers also said that the new benchmark might prompt the RBA to raise the interest rate again in the upcoming weeks in order to avoid any further rising inflation.
Given that the CPI increased by 7.3 per cent in the September quarter, the ABS' consumer price index (CPI) estimate for the December quarter was marginally less severe than the Reserve Bank's prediction of 8 per cent.
Treasurer Jim Chalmers has described this number as 'unacceptably high' since it is proof that Australians are still struggling with the cost of living.
The inflation spike was primarily fuelled by rising transport and housing costs. We can thank the reopening of state and territory borders and freedom to travel domestically to bolster a 13.3 per cent rise in holiday costs.
Meanwhile, petrol increased 13.2 per cent after the Ukraine invasion pushed up crude oil prices in the early part of 2022.
Flooding on the East Coast in early 2022 affected the supplies of fruits and vegetables, leading to an overall increase of 8.5 per cent.
The ABS report also detailed the price increases for the goods we need to buy every week. Dairy products had the biggest annual increase (14.9 per cent), followed by bread and cereal (12.2 per cent), and electricity (8.6 per cent).
Despite outcries of the current level being 'unreasonable', the treasurer said he believes inflation may have reached its peak
Chalmers said: 'This is very high inflation by historical standards, there's no use pretending otherwise, it's unacceptably high.'
'This is likely the peak in inflation but we won't know that for sure until we get the numbers for this March quarter that we're in now.'
'Inflation was the defining challenge in our economy in 2022 and it will be a defining challenge in our economy in 2023.'
In support of Chalmers' claim, AMP senior economist Diana Mousina, said that the rate increase in February was probably the last in the current cycle of tightening monetary policy, adding that inflation was projected to start to decline in 2023.
'The inflation backdrop looks much better at the start of 2023 compared to last year and many inflation indicators are pointing down which should mean that we are very close to the end of the tightening cycle and that the February rate rise should be the last one for this year,' she explained.
Meanwhile, Catherine Birch, Australia and New Zealand (ANZ) Banking Group Limited Senior Economist, predicted that the RBA will hike interest rates in February and March, bringing the cash rate to 3.6 per cent.
However, while inflation is anticipated to reduce from this point, economists predicted that it will continue to exceed the Reserve Bank of Australia's goal range of 2 to 3 per cent until 2025.
Additionally, the underlying measures of inflation, which exclude volatile price changes, were likewise high, with the trimmed mean increasing by 6.9 per cent over the last year.
We know the cost of living crisis is real and affects those with fixed incomes more than most, so let's all hope inflation continues to sit within the RBA's target and that there won't be any further rate hikes.
We understand these pesky living expenses can really put a dent in your budget, so make sure you stay up to date with the latest money-saving tips and take advantage of the daily deals and discounts that we share here at the SDC!
What are your thoughts on this? Share them with us in the comments below!
And while many of us are hoping for some relief, it seems like those who are dealing with a tight budget will have to face further financial instability.
The Australian Bureau of Statistics (ABS) has reported that the cost of living crisis in the country has hit a new high, with inflation surging to 7.8 per cent in the December quarter of 2022. .
The ABS claimed that the figure marks the fastest annual pace of inflation since the March quarter of 1990 and well above the Reserve Bank of Australia’s (RBA) 2 to 3 per cent target.
ABS researchers also said that the new benchmark might prompt the RBA to raise the interest rate again in the upcoming weeks in order to avoid any further rising inflation.
ABS reported that the recent consumer price index hit an all-time high mark since 1990. Credit: Pexels/Monstera.
Given that the CPI increased by 7.3 per cent in the September quarter, the ABS' consumer price index (CPI) estimate for the December quarter was marginally less severe than the Reserve Bank's prediction of 8 per cent.
Treasurer Jim Chalmers has described this number as 'unacceptably high' since it is proof that Australians are still struggling with the cost of living.
The inflation spike was primarily fuelled by rising transport and housing costs. We can thank the reopening of state and territory borders and freedom to travel domestically to bolster a 13.3 per cent rise in holiday costs.
Meanwhile, petrol increased 13.2 per cent after the Ukraine invasion pushed up crude oil prices in the early part of 2022.
Flooding on the East Coast in early 2022 affected the supplies of fruits and vegetables, leading to an overall increase of 8.5 per cent.
The ABS report also detailed the price increases for the goods we need to buy every week. Dairy products had the biggest annual increase (14.9 per cent), followed by bread and cereal (12.2 per cent), and electricity (8.6 per cent).
Despite outcries of the current level being 'unreasonable', the treasurer said he believes inflation may have reached its peak
Chalmers said: 'This is very high inflation by historical standards, there's no use pretending otherwise, it's unacceptably high.'
'This is likely the peak in inflation but we won't know that for sure until we get the numbers for this March quarter that we're in now.'
'Inflation was the defining challenge in our economy in 2022 and it will be a defining challenge in our economy in 2023.'
In support of Chalmers' claim, AMP senior economist Diana Mousina, said that the rate increase in February was probably the last in the current cycle of tightening monetary policy, adding that inflation was projected to start to decline in 2023.
'The inflation backdrop looks much better at the start of 2023 compared to last year and many inflation indicators are pointing down which should mean that we are very close to the end of the tightening cycle and that the February rate rise should be the last one for this year,' she explained.
Meanwhile, Catherine Birch, Australia and New Zealand (ANZ) Banking Group Limited Senior Economist, predicted that the RBA will hike interest rates in February and March, bringing the cash rate to 3.6 per cent.
However, while inflation is anticipated to reduce from this point, economists predicted that it will continue to exceed the Reserve Bank of Australia's goal range of 2 to 3 per cent until 2025.
Additionally, the underlying measures of inflation, which exclude volatile price changes, were likewise high, with the trimmed mean increasing by 6.9 per cent over the last year.
We know the cost of living crisis is real and affects those with fixed incomes more than most, so let's all hope inflation continues to sit within the RBA's target and that there won't be any further rate hikes.
We understand these pesky living expenses can really put a dent in your budget, so make sure you stay up to date with the latest money-saving tips and take advantage of the daily deals and discounts that we share here at the SDC!
What are your thoughts on this? Share them with us in the comments below!
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