Shock as inflation goes UP in Australia despite 11 interest rate hikes as experts reveal why the pain may just keep coming
- Inflation went up in April by 6.8 per cent
- This was more than March rise of 6.3 per cent
Inflation has gone up despite the Reserve Bank hiking interest rates 11 times in a year – stirring fears of another hike next week.
The official monthly measure for April showed a reading of 6.8 per cent, up from 6.3 per cent in March, the Australian Bureau of Statistics revealed on Wednesday.
Economist Warren Hogan, the managing director of EQ Economics, said the bad news could see the Reserve Bank raise interest rates again on Tuesday next week.
‘Bottom line is inflation down from peak but not looking like coming down quickly,’ he tweeted.
‘Confirms strong tightening bias. Can’t rule out a hike next week.’
This would make the 12th hike since May 2022, with rates already surging at the steepest pace since 1989.
The 11th increase in a year, this month, took the cash rate to an 11-year high of 3.85 per cent.
Inflation has gone up despite the Reserve Bank hiking interest rates 11 times in a year (pictured is a Woolworths shopper in Sydney’s eastern suburbs)
Economist Warren Hogan, the managing director of EQ Economics, said the bad news could see the Reserve Bank raise interest rates again on Tuesday next week
Food prices are still surging with bread and cereal prices soaring by 11.4 per cent in a year as electricity bills rose by 15.2 per cent.
The big price increases
ELECTRICITY: Up 15.2 per cent
HOLIDAY, TRAVEL ACCOMMODATION: Up 11.9 per cent
BREAD, CEREAL: Up 11.4 per cent
The numbers were revealed after Reserve Bank of Australia Governor Philip Lowe told a parliamentary hearing in Canberra that inflation could still stay high.
‘While inflation expectations are still well anchored at the moment, we can’t take that for granted,’ he told the Senate economics committee on Wednesday.
‘Given what we’re seeing internationally, I think the risks on inflation are more on the upside and we need to be attentive to that.’
Dr Lowe inflation could stay high if wage rises didn’t occur at the same time as productivity improvements.
‘The problem is weak productivity growth,’ he said.
‘Over the last three years, there has been no increase in the average output produced per hour worked in Australia.
‘No increase for three years and that’s a problem.
‘And that means unit labour costs growth in Australia is quite high.
‘It’s a problem for the country and it’s a problem for the inflation outlook as well.’
The numbers were revealed after Reserve Bank of Australia Governor Philip Lowe told a parliamentary hearing inflation could still stay high
The Reserve Bank is still expecting headline inflation, also known as the consumer price index, to return to the top of its two to three per cent target in June 2025.
It relies more on the quarterly number which in March fell to 7 per cent, down from a 32-year high annual pace of 7.8 per cent in the December quarter.
But Dr Lowe said that was no guarantee inflation would moderate on schedule.
‘There’s still quite a lot of uncertainty about household spending,’ he said.
The official monthly measure for April showed a reading of 6.8 per cent, up from 6.3 per cent in March, the Australian Bureau of Statistics revealed on Wednesday (pictured is a Coles supermarket in Sydney)