Anthony Albanese’s financial balancing act seems set to take a tumble as high economists warn a spike in inflation might immediate one other rate of interest hike – the 14th in two years.
Inflation jumped to 4 per cent within the yr to Could, up from 3.6 per cent the month earlier than, prompting NAB analysts to warn that any price lower may very well be delayed till after Could subsequent yr.
A cocktail of rising vitality payments, larger petrol costs and skyrocketing rents have helped push the patron value development to a six-month excessive – nicely above the Reserve Financial institution’s 2 to three per cent goal.
Analysts from UBS and Deutsche Financial institution have now joined Judo Financial institution chief economist Warren Hogan to foretell a 14th price hike in August, in response to The Australian.
The prediction may very well be a crushing blow to embattled mortgage holders who’ve weathered 13 price hikes between Could 2022 and November 2023.
Anthony Albanese’s financial balancing act seems set to take a tumble as high economists warn a spike in inflation might immediate one other price hike
NAB analysts have warned that any rate of interest lower may very well be delayed till after Could subsequent yr in an try and preserve inflation down. Pictured is a consumer at Coles
The prime minister is predicted to speak up his authorities’s price of residing measures and financial administration report in parliament on Thursday morning.
However some economists warn that Mr Albanese’s price of residing measures run the danger of retaining inflation excessive and due to this fact hurting battling Aussies within the pocket.
‘Governments are throwing some huge cash on the signs of the cost-of-living disaster, however that worsens the reason for it. And the trigger is simply too many {dollars} chasing too little stuff,’ impartial economist Chris Richardson advised the publication.
‘Governments have deserted the sector within the inflation battle. We’re preventing the inflation battle one-handed.’
In information that can stir anger within the hearts of struggling households, Mr Richardson warned that ‘mortgage reduction is a really, very great distance away’.
Embattled mortgage holders have weathered 13 price hikes between Could 2022 and November 2023
EY chief economist Cherelle Murphy additionally mentioned one other price hike was now a powerful risk when the RBA meets once more in August.
‘The month-to-month client value index has jolted monetary markets, which at the moment are as soon as once more critically contemplating the potential for one other price hike from the Reserve Financial institution at its subsequent assembly,’ she mentioned.
The unhealthy information was delivered solely every week after RBA Governor Michele Bullock confirmed a price rise was extra probably than a price lower, with the money price this month left on maintain at a 12-year excessive of 4.35 per cent.
‘Sure, the board did focus on the case for rising rates of interest at this assembly,’ she advised reporters.
‘No, the case for a lower was not thought of.’
RBA Governor Michele Bullock (pictured) confirmed a price rise was extra probably than a price lower
Regardless of fears that Labor’s price of residing insurance policies, such because the $300 vitality invoice rebate and the stage three tax cuts, are serving to to drive up inflation, Mr Albanese is about to spruik that ‘inflation is down’ in parliament on Thursday.
In a speech to a CEDA convention, he’ll boast that his insurance policies have been launched ‘in order that it takes strain off folks, with out placing strain on inflation’.
‘Inflation is down. Annual actual wages development is again,’ Mr Albanese will say.
‘Unemployment stays at close to 50-year lows. And the gender pay hole is at a report low. My colleagues and I are happy with this report.’
The month-to-month measure of inflation is now again on the highest degree since November 2023, when the Reserve Financial institution final raised rates of interest.
However Treasurer Jim Chalmers mentioned the month-to-month client value index was risky and due to this fact much less dependable than the quarterly inflation measure.
‘As we have mentioned many occasions earlier than the month-to-month CPI quantity is risky and might bounce round as a result of not each merchandise within the basket is up to date every month,’ he mentioned on Wednesday.
‘At this time’s annual quantity was dragged larger by gas costs and the impression of base results, that are the results of a big fall in month-to-month inflation in Could 2023 impacting the annual Could 2024 quantity.’
