Inflation rate Australia

2022 - 4 - 27

what is inflation

Post cover — Image courtesy of "The Guardian"

Australia faces prospect of pre-election rate rise as inflation and ... (The Guardian)

The annual CPI rate rise to 5.1% was higher than expectations and reflects higher fuel and food costs, sparking fears of an interest rate rise.

“Pegging the first rate hike in the cycle to a high CPI outcome is best from a public presentation perspective,” David Bassanese, an economist with Betashares, said. The pace of food price increases, including 4.3% year-on-year, is the most since 2011, Rabobank said. As anticipated, fuel, food and material costs were among the items posting big increases in the first quarter of 2022. The prime minister, Scott Morrison, and the treasurer, Josh Frydenberg, highlighted other nations’ higher inflation. “International trade bottlenecks are producing supply constraints on a scale not seen in almost 50 years,” McKellar said. The so-called trimmed mean inflation, which strips out volatile changes and is used by the central bank to set rates, rose 3.7%, or the most since March 2009. Those nations with a higher inflation rate, though, have already started lifting interest rates with more to come. A weekly survey of consumer sentiment by ANZ and Roy Morgan out today showed confidence had stalled after rising for three weeks following the 29 March federal budget. Two more ABS releases of note are scheduled before the 21 May election. “To not do so risks the RBA losing credibility.” The federal government’s 22.1 cents cut in the fuel excise will take some of the sting out of petrol prices during the June quarter, and much of the September one. “This reflected the broad-based nature of price rises, as the impacts of supply disruptions, rising shipping costs and other global and domestic inflationary factors flowed through the economy,” she said.

Surging inflation means an interest rate rise could come next week ... (ABC News)

Consumer prices jump by the most since the GST was introduced, with the cost of living up 5.1 per cent over the past year, prompting increasing speculation ...

Critically, the Reserve Bank's preferred measure of inflation, which strips out the most extreme price moves, came in at 3.7 per cent, which is well above its 2-3 per cent target and adds to pressure for interest rates to start rising as soon as next week. The last time inflation was this high was in June 2001, when prices rose 6.1 per cent largely from the effect of the recently introduced 10 per cent Goods and Services Tax. - The RBA's preferred measure of inflation is 3.7 per cent, well above the top of its 2-3 per cent target

Australia's inflation rate jumps to 5.1 per cent as RBA ponders cash ... (7NEWS.com.au)

The Australian Bureau of Statistics on Wednesday announced its quarterly Consumer Price Index (CPI) figures. Watch the latest News on Channel 7 or stream for ...

“The grocery component of the group, which excludes meals out and takeaway foods, rose 4.0 per cent in the March quarter.” The main contributor to the rise was a 6.6 per cent jump in the price of vegetables, waters, soft drinks and juices up by 5.6 per cent, fruit up by 4.9 per cent and beef up 7.6 per cent. “The rise for the food group was softened by voucher programs in Sydney and Melbourne, which reduced out-of-pocket costs for meals out and takeaway foods,” she said. Underlying inflation - which smooths out volatile price swings and is more crucial to the interest rate outlook - jumped 1.4 per cent to 3.7 per cent for the year. The rate of the rise could force the Reserve Bank of Australia’s hand in hiking the cash rate from its record low of 0.1 per cent. Its headline figure, the annual inflation rate, jumped to 5.1 per cent after a 2.1 per cent quarter.

Australian inflation hits 20-yr high, May rate rise seen in play (Reuters)

Australian consumer prices surged at the fastest annual pace in two decades last quarter as petrol, home building and food costs all climbed, ...

"We now expect the RBA to hike by 15 basis points next week. Register now for FREE unlimited access to Reuters.com A cash rate target of 0.1% is inappropriate against this backdrop." Register now for FREE unlimited access to Reuters.com Register now for FREE unlimited access to Reuters.com

Inflation hits an extraordinary 5.1%. How long until mortgage rates ... (The Conversation AU)

The outsized increase, together with a larger than normal increase in the months to December, pushed Australia's annual inflation rate way above the Reserve ...

The response of the Reserve Bank to higher prices is not as automatic as often supposed. But, unusually, the current target is 0.10%. So it might first move 15 points to 0.25%. Households have more debt, meaning that a rate increase of any given size has more impact than it once would have. Looking ahead, inflation is likely to drop in the June quarter. If the wages data show no acceleration, it might be later. Some supply chain problems and skilled labour shortages caused by the pandemic are likely to ease. People tend not to notice the many other prices, including rents in some parts of Australia, that have been falling. In part this is because people tend to notice the prices that have jumped. Many people don’t believe the official inflation figures. Petrol prices rose to a record high. Fresh food prices have increased due to floods. The trimmed mean excludes the 15% of prices that climbed the most in the quarter and the 15% of prices that climbed the least or fell.

Australia: Inflation breaches 5 percent (ING Think)

You have to go back to 2Q 2001 to find a headline inflation rate in Australia that is higher than the latest 5.1%YoY figure. Core inflation is also up. The…

Taking the cash rate target to 0.5% with a 40bp hike from the current 10bp would seem to make more sense now than a 15bp hike to 0.25%, which bond markets might now view as a derisory response to the inflation surge and the record low unemployment rate. The broad spread of gains meant that as well as the rise in the headline inflation rate, core inflation rates also surged. Today's inflation upside miss also makes the debate about whether or not the inflation increase is "sustained" somewhat redundant. More recent iterations of their statements have pared back this guidance and walked away from specific dates, instead, replacing calendar references with comments about "patience" with respect to monetary policy. The Reserve Bank of Australia (RBA) will not be able to ignore this The quarterly increase was broadly spread among sub-components.

ScoMo sweats election rate rise (NEWS.com.au)

Prime Minister Scott Morrison is sweating over potential interest rate hikes as inflation spikes to its highest level in more than two decades.

Should it not happen they should condemn the #RBAfor doing same. It's job is to manage inflation (and support full employment). Everything is in place now for rate hikes next week, whatever happens in WPI.— Kyle Rodda (@Kyle_Rodda) $aud @RBAInfo April 27, 2022 Economists from all quarters should condemn anyone who seeks to politicise such a move. There'll be talk about the RBA waiting for wage growth next month. “Economists from all quarters should condemn anyone who seeks to politicise such a move. Main contributors to the rise in food prices included vegetables (up 6.6 per cent), waters, soft drinks and juices (up 5.6 per cent), fruit (up 4.9 per cent) and beef (up 7.6 per cent). “This inflation number should be a wake-up call for a government is out of touch, out of plans and out of time. “This is not a time to roll the dice on fake independents, a weak Labor leader and the chaos of a hung parliament,” Frydenberg said. “This is his triple whammy of skyrocketing costs of living, rising interest rates and falling real wages and that is what the number was all about today,” Chalmers said. Under Scott Morrison the costs of living are skyrocketing while real wages are going backwards â€“ and interest rate rises are about to add to the pain. “But I’m not going to speculate on what the Reserve Bank may or may not do, at the next meeting, the meeting after or the meeting after that.” Treasurer Josh Frydenberg said the figure was a reminder that Australians lived in a “complex and volatile economic environment” and he pointed to the war in Ukraine as a key reason that fuel prices, for example, have leapt 11 per cent.

Australia's Soaring Inflation Rate A Hit To The Hip Pocket (Triple M)

The cost of living and record inflation rates are set to become the key issues of the election campaign in the weeks ahead. Fuelled by record petrol prices ...

And that food is definitely becoming a discretionary item for people with the least. That is the reality of what's happening. “Australia is not immune from the international pressures driving up inflation. "The war in Ukraine has seen a spike in fuel prices, gas prices and commodity prices being felt here at home," he said. The war in Ukraine has seen a spike in fuel prices, gas prices and commodity prices being felt here at home.” The cost of living and record inflation rates are set to become the key issues of the election campaign in the weeks ahead.

The Australian inflation rate gives the lie to Morrison's claims of ... (The Guardian)

Workers' ability to buy things with their wages is little different from when Tony Abbott took office in September 2013.

That truly destroys any sense that there has been some glorious recovery out of the pandemic. Graph not displaying? Graph not displaying? Graph not displaying? Graph not displaying? Graph not displaying?

Soaring inflation puts pre-election interest rate hike on the cards ... (9News)

With inflation soaring to a 21-year high, a pre-election hike in interest rates could now well be on the ca...

"They are going to increase interest rates, they are going to do it. We are in the middle of a global pandemic, with a war in Europe. I think Australians understand that." "Now, we are seeing inflation rise faster than people expected, and that means the Reserve Bank are going to have to pull on the brake probably harder and faster than they expected." Today, it is 0.1 percent," Mr Morrison said. They are very different situations.

The cost of living is surging, so why will the RBA add to it by raising ... (ABC News)

The Reserve Bank is increasingly likely to start raising interest rates next Tuesday. But why would it add increased interest costs to household budgets at ...

Currently (the most recent figures were for December), average annual wage increases of 2.3 per cent are running well behind inflation and have been much slower to increase. Some, like the Reserve Bank of New Zealand, started raising interest rates last year. Although, it too has much higher inflation at 8.5 per cent. The latest inflation figures also showed that while goods inflation was much higher (6.6 per cent), services inflation was also around the top of the RBA target (3 per cent). It is, to a point. In the end, the rising cost of living would do most of the Reserve Bank's work for it and limit demand in the economy. The first is that most of the current inflation is not being driven as much by domestic demand as by temporary global supply-chain disruptions and shortages, due mainly to COVID-19 and conflict. That's why higher inflation is beneficial to borrowers as the "real" value of their debt is falling compared to the general increase in prices and wages. "And if the Reserve Bank doesn't get on top of inflation now and it starts to take off — and we've seen this, internationally, we've seen it in the US, we've seen it in the UK — we could be facing much more dire inflation. That's how it reduces demand. Inflation has never been that high in Australia, but it was much higher in the 1970s and 80s than it has been since, and those levels of price rises were seen to be hurting economic growth. The cost of living is surging, so why will the RBA add to it by raising interest rates?

Inflation rate Australia

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