Inflation is STILL sky high at 7 per cent after 10 consecutive interest rate rises in grim development as RBA mulls fresh rate hike
- Inflation up 7 per cent in year to March
- Westpac predicts May 2 rate increase
Australian inflation still remains high at seven per cent despite 10 consecutive interest rate rises from the Reserve Bank – with another rate rise expected next week.
The latest consumer price index data shows inflation stubbornly above the Reserve Bank of Australia’s 2 to 3 per cent target.
In the year to March, it rose by seven per cent, with food prices continuing to soar by double-digit figures.
This was a moderation from the 32-year high annual pace of 7.8 per cent in December.
But despite that, the Westpac bank is expecting the RBA to raise rates again on May 2 to a new 11-year high of 3.85 per cent, up a quarter of a percentage point from 3.6 per cent.
Australian inflation still remains high at 7 per cent despite 10 consecutive interest rate rises from the Reserve Bank.
Sean Callow, a senior currency strategist, said renewed wages growth could spark another 25 basis point rate rise next week, which would be the 11th since May 2022.
This would follow an April pause, which was the first in a year of RBA meetings.
‘The minutes of the April meeting revealed that the board considered a 25 basis point move before opting for a pause and that it is newly worried about both the pace of population growth through immigration and of “increased risk of larger wage increases in parts of the economy, including in the public sector, later in the year”,’ Mr Callow said.
The Australian Council of Trade Unions last month called for a seven per cent increase in the minimum wage and award pay levels, based on February’s 6.8 per cent inflation reading.
The more comprehensive March quarter inflation figures from the Australian Bureau of Statistics showed a 9.8 per cent annual surge in housing costs, which covers rents and building costs.
Recreation and culture costs increased by 8.6 per cent, compared with 6.5 per cent for insurance and financial services.
Goods inflation eased to 7.6 per cent, down from 9.5 per cent in the December quarter, due to discounting on furniture, electrical appliances and clothes, along with a moderation in petrol prices.
Annual food inflation eased to 8 per cent, down from 9.2 per cent.
But dairy product prices were still up 14.9 per cent in the year to March, compared with 11.8 per cent for bread and cereal and 7.3 per cent for takeaway meals.
In a rare bit of good news, clothing and footwear costs rose by just 3.2 per cent, but this is still outside the RBA’s 2 to 3 per cent target.
The latest consumer price index data shows inflation stubbornly above the Reserve Bank of Australia’s 2 to 3 per cent target (pictured is Governor Philip Lowe)
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