Who is to blame for Australia's inflation problem and stubbornly high interest rates?
4 months, 3 weeks ago

Who is to blame for Australia's inflation problem and stubbornly high interest rates?

ABC  

What, or more precisely who, is to blame for the inflation episode that has up-ended our lives for the past three years? In all the noise this week about electricity prices, and the federal government assistance that has temporarily kept energy bills in check, we've overlooked one of the persistent driving forces behind our elevated inflation. Interestingly, both relate to housing and — when combined with medical, dental and education — are part of the services inflation problem that is keeping our price growth persistently high while the cost of most goods continues to slide. Ask most senior economists what should be done to curb this services inflation and, quick as a flash, they'll tell you: "Raise interest rates." It reflects the impossibly strong real estate market – which mostly isn't included in the inflation data – that is sitting at record levels nationally despite 13 rate hikes.

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History of this topic

Has Australia's economy turned the corner? Angus Taylor has a warning
2 weeks, 4 days ago

Has Australia's economy turned the corner? Angus Taylor has a warning

ABC  

Economists say Australia has turned a corner. Last week, he said labour productivity was still "disastrous" in Australia and the purchasing power of our wages had deteriorated "disastrously" since Labor won the election in 2022. By the time the 2022 election was held, the "real" value of our wages had already deteriorated so much that our wages were buying less …

Why isn't the Albanese government boasting about falling inflation?
3 weeks, 4 days ago

Why isn't the Albanese government boasting about falling inflation?

ABC  

Independent economist Saul Eslake made a fascinating observation recently. "Nonetheless, I'm genuinely surprised that Treasurer Jim Chalmers and his colleagues haven't been proclaiming often and loudly that they've "pulled off" something that has never been accomplished before in Australia," he said. By "tolerable," he means a level of inflation that's become low enough for the Reserve Bank of Australia to …

Inflation has fallen in Australia and NZ, but which is faring better?
1 month, 2 weeks ago

Inflation has fallen in Australia and NZ, but which is faring better?

ABC  

New Zealand's economy is in recession. But inflation has fallen in both countries, and Australia's Reserve Bank is expected to start cutting interest rates soon. For example, New Zealand's labour force hasn't grown in the past 12 months, but you wouldn't know that by looking at its unemployment rate. Therefore, you could argue that New Zealand's unemployment rate is obscuring …

Why the bout between the Reserve Bank and the federal government is about to heat up
3 months, 3 weeks ago

Why the bout between the Reserve Bank and the federal government is about to heat up

ABC  

There's an old adage that oppositions don't win elections, governments lose them. RBA Governor Michele Bullock says Australia's strategy of reducing inflation without stoking too much unemployment is part of the reason why it looks different to peer economies right now. RBA unlikely to react to October inflation data Photo shows Household money pic Australia's inflation rate remained steady in …

Big hint Anthony Albanese is responsible for you missing out on a rate cut - with Australia's most powerful banker blaming government spending for inflation
4 months, 2 weeks ago

Big hint Anthony Albanese is responsible for you missing out on a rate cut - with Australia's most powerful banker blaming government spending for inflation

Daily Mail  

Australia's most powerful banker has given a strong hint that excessive government spending is to blame for high inflation, ruling out rate cuts until 2025. Australia's most powerful banker has given a strong hint excessive government spending is to blame for high inflation - and therefore no rate cuts While headline inflation has fallen to a three-and-a-half year low of …

PETER VAN ONSELEN: Which of these statements about the Australian economy is true? 1) Australia has won the war on inflation 2) Interest rates are too high 3) The country is run by a bunch of muppets
6 months ago

PETER VAN ONSELEN: Which of these statements about the Australian economy is true? 1) Australia has won the war on inflation 2) Interest rates are too high 3) The country is run by a bunch of muppets

Daily Mail  

I used to enjoy a good muppet show as a kid, but the muppet show we'll see tomorrow when the latest inflation data gets revealed will be far less edifying. RBA Governor Michele Bullock will see through tomorrow's headline inflation figure And that underlying figure will be higher than the top end of the Reserve Bank's target range. The underlying …

Is there a generational divide in Australia's spending habits? Here's what the data tells us
6 months, 2 weeks ago

Is there a generational divide in Australia's spending habits? Here's what the data tells us

ABC  

Are we in a baby boomer boom? An internal Reserve Bank note said the difference in consumption growth is "consistent with differences in household balance sheets" because older households benefit from higher interest rates. "So you can't blame the boomers, as so many people like to do, for perhaps demand running a little bit hotter than the Reserve Bank would …

The RBA is making confusion about inflation and the cost of living even worse
6 months, 3 weeks ago

The RBA is making confusion about inflation and the cost of living even worse

ABC  

There's a paradox about the way we respond to threats to the cost of living. At the same time, when the cost of living climbs enough to push inflation beyond the Reserve Bank's target, the bank pushes up interest rates in an attempt to drive measured inflation down. Sharp interest rate increases are a problem The response of the Reserve …

Why headline inflation numbers are masking the confronting financial reality facing many households
7 months, 3 weeks ago

Why headline inflation numbers are masking the confronting financial reality facing many households

ABC  

There won't be protest marches in the streets when the Reserve Bank of Australia makes its next decision on interest rates. In the lead-up to Wednesday's inflation reading for the June quarter, there was speculation that if it came in hot, above 4 per cent, a rate rise would be on the cards. In the end, the "headline" annual rate …

PETER VAN ONSELEN: Jim Chalmers' excuses for Australia's inflation crisis spectacularly unravel - with two key stats easily blowing apart the garbage Treasurer is peddling
7 months, 3 weeks ago

PETER VAN ONSELEN: Jim Chalmers' excuses for Australia's inflation crisis spectacularly unravel - with two key stats easily blowing apart the garbage Treasurer is peddling

Daily Mail  

Treasurer Jim Chalmers wants you to believe that rising inflation isn't his fault. Under pressure: Jim Chalmers' excuses for Australia's 'sticky' inflation crisis are unravelling He wants you to focus on the fact inflation is lower now than when Labor came to power. In other words Australia's rising inflation - a quarterly adjusted figure of 3.8 per cent - is …

Why the Reserve Bank of Australia should hold off on interest rate hikes in August
7 months, 3 weeks ago

Why the Reserve Bank of Australia should hold off on interest rate hikes in August

ABC  

There's a curious thing about openness, communication and transparency. Because, despite recently showing a real reluctance to want to push interest rates even higher, she and her Reserve Bank of Australia colleagues have for the past two years made it abundantly clear that they were committed to hammering inflation into submission. Money markets right now have just a one-in-five chance …

The good news is the Australian economy is about to turn up. Here's why
9 months ago

The good news is the Australian economy is about to turn up. Here's why

ABC  

Right now things feel awful. Inflation was going to be 3.9 per cent, not the present 3.6 per cent and headed down, and the Reserve Bank's cash rate was going to climb two times in the second half of 2023 from 4.1 per cent to 4.5 per cent. Back in mid-2023, when asked about the probability of a recession in …

Spare us the talk about a wages explosion. There's nothing wrong with lifting Australia's lowest wages in line with inflation
9 months, 3 weeks ago

Spare us the talk about a wages explosion. There's nothing wrong with lifting Australia's lowest wages in line with inflation

ABC  

What is it with the Coalition and wages? Now, two years on, after yet another Fair Work Commission decision that lifted award wages in line with inflation, the Coalition has returned to the fray. On Monday, shadow finance minister Jane Hume asked Treasury Secretary Steven Kennedy at a Senate hearing how he could support a wage increase linked to inflation …

Why further interest rate hikes by the Reserve Bank won't fix Australia's inflation problem
10 months, 2 weeks ago

Why further interest rate hikes by the Reserve Bank won't fix Australia's inflation problem

ABC  

If only there was a diagnosed condition called One Size Fits All syndrome. That's helped push one measure of price rises — core inflation — higher on a quarterly measure. Quick as a flash, that's sparked a renewed demand from some sections of the economics commentariat for further rate hikes to smash the evils of inflation once and for all. …

Annual inflation slows to 3.6 per cent as higher than expected price rise in March quarter rules out early rate cut hopes
11 months ago

Annual inflation slows to 3.6 per cent as higher than expected price rise in March quarter rules out early rate cut hopes

ABC  

In short: Inflation has come in higher than expected, with prices rising by 1 per cent in the March quarter significantly reducing the chance of rate cuts by the Reserve Bank this year. Inflation has come in higher than expected, with prices rising by 1 per cent in the March quarter significantly reducing the chance of rate cuts by the …

Did the Reserve Bank hit the brakes too hard? Why Australia's economy is heading into reverse
1 year ago

Did the Reserve Bank hit the brakes too hard? Why Australia's economy is heading into reverse

ABC  

The softening-up process is already underway. There's now every possibility the GDP numbers could tip negative, giving the first real indication that Australia's economy is shrinking under the weight of 13 interest rate hikes in quick succession. The RBA lifted the cash rate to 4.35 per cent last November, but it hasn't fully flowed through to the whole economy. Prepare …

Inflation further cools in Australia as confidence of ‘soft landing’ grows
1 year, 1 month ago

Inflation further cools in Australia as confidence of ‘soft landing’ grows

Associated Press  

SYDNEY — Inflation in Australia has slowed to its lowest rate in three years, the country’s official statistics agency said Wednesday, raising hopes of a “soft landing” for the nation’s economy. While the CPI is still above the Reserve Bank of Australia’s target band of 2-3%, the bigger than expected slowdown will raise mortgage holders’ hopes that relief on interest …

Inflation figures Australia: Major development in country's cost of living battle
1 year, 1 month ago

Inflation figures Australia: Major development in country's cost of living battle

Daily Mail  

Inflation has fallen significantly to a two-year low just months before lower and middle-income Australians are due to receive bigger tax cuts. This was the lowest headline inflation rate since December 2021, when it was at 3.5 per cent following the lockdowns in Sydney and Melbourne but before Russia's Ukraine invasion pushed petrol prices above $2 a litre. Inflation has …

What are the alternatives to using interest rates to tackle inflation? We put your questions to economist Saul Eslake
1 year, 1 month ago

What are the alternatives to using interest rates to tackle inflation? We put your questions to economist Saul Eslake

ABC  

Daniel Wigg doesn't drink alcohol anymore. "Although, like interest rates, it would leave older people unscathed," Mr Eslake said. Saul Eslake says lifting income tax was a common way of responding to high inflation in the 1950s and 60s, but "no government would want to do that now". Mr Eslake also said interest rates were kept "too low for too …

Why further RBA interest rate hikes are less likely now than even one week ago
1 year, 4 months ago

Why further RBA interest rate hikes are less likely now than even one week ago

ABC  

Since Australia's Reserve Bank hiked interest rates two weeks ago, there have been two important developments — one in the United States and the other in the United Kingdom. In this way, decisions made in the US not to increase interest rates or even to cut them make it easier for Australia's Reserve Bank not to increase rates — or …

Inflation is falling in Australia and New Zealand — but how do we stack up against the rest of the world?
1 year, 8 months ago

Inflation is falling in Australia and New Zealand — but how do we stack up against the rest of the world?

ABC  

For more than 12 months, Australians have been hit with interest rate rise after interest rate rise in pursuit of a golden ideal — bringing inflation down. United States of America Current inflation rate: 3 per cent Inflation rate July 2022: 8.5 per cent Despite overall CPI falling, the price of groceries in the US remains high. United Kingdom Current …

Companies chasing profits amid high inflation risks an Australian recession, RBA warns
1 year, 9 months ago

Companies chasing profits amid high inflation risks an Australian recession, RBA warns

ABC  

The Reserve Bank has pointed directly to the inflation elephant in the room — that "some" companies are indeed helping to drive inflation with aggressive price increases. Today, for the first time, the Reserve Bank referenced that “some firms” were lifting their prices past levels of inflation, in effect locking those previous price rises into future pricing and making the …

Why Australian households are divided when it comes to financial pressure, and economists are divided on the outlook
1 year, 9 months ago

Why Australian households are divided when it comes to financial pressure, and economists are divided on the outlook

ABC  

At the lunchtime rush hour, a major Sydney city shopping strip is far from deserted, with plenty of people filling the mall — but not all have shopping bags in their hands. "We've cut back, that's for sure — we had a Europe trip booked but obviously can't afford that," said another worker whose home loan repayments have jumped. A …

Australia's cost-of-living crisis is hitting young people and low-income earners hard – but boomers are doing alright
1 year, 10 months ago

Australia's cost-of-living crisis is hitting young people and low-income earners hard – but boomers are doing alright

ABC  

The thing about a crisis is that it is, by nature, wild. Again, fast forward to today, and despite one of the most aggressive interest rate tightening cycles in the Reserve Bank's history, inflationary pressures remain. It's possible it will show inflationary pressures are easing, but it's also likely there will be pockets of higher inflation – especially regarding food …

Will the federal budget's relief package solve a problem or ignore it?
1 year, 10 months ago

Will the federal budget's relief package solve a problem or ignore it?

ABC  

Is it possible for a government to dole out $14.6 billion and not stoke the inflation fires? It is a good example of inflation creating inflation, where regulated service providers like water and toll roads are allowed to lift prices either to recoup costs or maintain returns above inflation. Fact check: Federal government debt Treasurer Jim Chalmers says that Labor …

Australians feeling the sting of inflation and rising interest rates could soon face a recession — and more pain
2 years ago

Australians feeling the sting of inflation and rising interest rates could soon face a recession — and more pain

ABC  

What happens on the other side of trouble? The National Accounts, which also measure inflation with what's called the GDP "price deflator", has the cost of living rising at 9.1 per cent. AMP senior economist Diana Mousina puts the "recession probability in the next two years as high, around 40 per cent". "That's almost half the 4.7 per cent annual …

Businesses are fuelling inflation with unnecessary price hikes — and struggling Australians are paying for it
2 years, 1 month ago

Businesses are fuelling inflation with unnecessary price hikes — and struggling Australians are paying for it

ABC  

Higher prices, that is. The Reserve Bank summed this up in this week's Monetary Policy Decision: "Global factors explain much of this high inflation, but strong domestic demand is adding to the inflationary pressures in a number of areas of the economy." "There's no doubt that corporations have taken advantage of the supply chain problems and the desperation of consumers …

Reserve Bank warns of at least two more interest rate rises in coming months, as the economic outlook worsens
2 years, 1 month ago

Reserve Bank warns of at least two more interest rate rises in coming months, as the economic outlook worsens

ABC  

Australia's cash rate has hit 3.35 per cent, after the Reserve Bank raised interest rates for the ninth time in a row — and signalled more interest rate pain ahead. That was the view of traders in the money market, who had priced loans on the basis that the bank's cash rate would climb just 0.35 points further after being …

Australia's inflation problem is now entrenched and that means interest rates have to rise again
2 years, 1 month ago

Australia's inflation problem is now entrenched and that means interest rates have to rise again

ABC  

The Treasurer warned us last year: Australia's inflation problem was likely to get worse before getting better. Misguided narrative Hogan also argues there's a "misguided narrative" around the trade-off between interest rates and inflation. Reserve Bank governor Philip Lowe said last year that if people became accustomed to high price increases, "the evil of inflation would be with us for …

Australia has a problem with inflation, and that likely means more interest rate hikes to come
2 years, 4 months ago

Australia has a problem with inflation, and that likely means more interest rate hikes to come

ABC  

Australia has a problem with inflation. It's a judgement call The Reserve Bank's inflation fighting job would be a heck of a lot easier if there wasn't such a time lag between cause and effect — that is, raising interest rates and seeing prices come down. But the Reserve Bank's key objective of lowering inflation back to the target range …

In an economy blighted by inflation, Australians like Dimuthu are collateral damage
2 years, 4 months ago

In an economy blighted by inflation, Australians like Dimuthu are collateral damage

ABC  

Perth mother Dimuthu Peterson is feeling hopeless and considering working seven days a week to get by in an economy dogged by inflation. Key points: Economists have warned of further inflationary shocks ahead for Australia The latest inflation data may spur more aggressive interest rate rises The budget warns wages won’t match inflation for 18 months "It's our worst nightmare, …

Between rolling natural disasters and COVID, Australia's economy is experiencing a shift from shock to persistent problem
2 years, 5 months ago

Between rolling natural disasters and COVID, Australia's economy is experiencing a shift from shock to persistent problem

ABC  

Major flooding in suburban areas of Melbourne in the last couple of days have only reinforced the sense that we are now in a world of more or less rolling natural disasters. "The Treasury's current expectation is that a bigger and bigger part of this inflation problem over time will be what happens with power prices," Chalmers told journalists in …

Here's what was happening in Australia the last time the cash rate rose this quickly
2 years, 5 months ago

Here's what was happening in Australia the last time the cash rate rose this quickly

ABC  

Interest rates have risen for five consecutive months, a period of increase that has felt very sudden for borrowers. The RBA hiked interest rates 0.75 percentage points to 5.5 per cent in an effort to keep that inflation figure low and steady. It was the first rate rise in five years, and RBA governor Bernie Fraser said it was "necessary …

When will inflation peak in Australia? More regular data could help us find out
2 years, 5 months ago

When will inflation peak in Australia? More regular data could help us find out

ABC  

We're getting new statistics. Key points: The ABS has begun producing monthly inflation data It shows the annual rate of inflation was 6.8 per cent in August Economists say the new data will help them keep better track of inflation It has decided to publish inflation data on a monthly basis, rather than every three months. And according to the …

The US Federal Reserve is tightening monetary policy, and it's likely to impact Australian households
2 years, 6 months ago

The US Federal Reserve is tightening monetary policy, and it's likely to impact Australian households

ABC  

Mortgage borrowers and renters may be slugged with higher monthly payments than even the most pessimistic forecasts currently suggest, and the Reserve Bank won't be to blame. The more the US Federal Reserve tightens its monetary policy, or raises its Federal Funds rate, the more pressure is on the Reserve Bank to follow suit, regardless of inflation pressures here in …

Australia is in the middle of a cost-of-living crisis but we're not the only ones. Here’s what inflation looks like around the world
2 years, 7 months ago

Australia is in the middle of a cost-of-living crisis but we're not the only ones. Here’s what inflation looks like around the world

ABC  

Aussies are well aware that the cost of living is increasing. New Zealand Inflation rate: 7.3 per cent Price of fuel: $2.72/litre Average house price: $895,088 Akin to Australia, New Zealand has been weighted under rising costs increasingly during 2022 according to Stats NZ, New Zealand's official data agency. United Kingdom Inflation rate: 9.4 per cent Price of fuel: $3.03/litre …

How does corporate Australia expect households to cope with cost of living — and why we should pay attention
2 years, 7 months ago

How does corporate Australia expect households to cope with cost of living — and why we should pay attention

ABC  

Quietly, and without too much fanfare, the Australian share market has pulled itself out of a technical correction. Some companies have already reported and from today we'll get profit updates and forward guidance from the Commonwealth Bank, Macquarie Group and Telstra — some of the country's biggest employers. Yesterday the National Australia Bank revealed the outlook for its credit quality …

Inflation surges by 6.1 per cent - highest since 2001 stirring fears of big August rate rise
2 years, 7 months ago

Inflation surges by 6.1 per cent - highest since 2001 stirring fears of big August rate rise

Daily Mail  

Soaring petrol, housing and food costs have caused Australia's inflation rate to surge by 6.1 per cent for the first time in two decades stirring fears of a super-sized interest rate rise in August. Australia's inflation rate has surged by 6.1 per cent for the first time in two decades stirring fears of a super-sized interest rate rise in August …

Australia’s central bank says interest rates too low after hikes
2 years, 8 months ago

Australia’s central bank says interest rates too low after hikes

Al Jazeera  

Reserve Bank of Australia suggests benchmark rate still too low as unemployment dips to lowest level in nearly 50 years. Australia’s central bank has signalled the need for higher interest rates to tame rising inflation, despite recent rate hikes, as unemployment drops to its lowest level in nearly 50 years. The Reserve Bank of Australia sees the current benchmark rate …

As experts frighten the living daylights out of everyone about interest rates, here are five reasons they won't rise as high as predicted
2 years, 8 months ago

As experts frighten the living daylights out of everyone about interest rates, here are five reasons they won't rise as high as predicted

ABC  

Surging costs for everyday grocery items and fresh food, exorbitant prices for fuel and, on top of everything, a series of punishing interest rate hikes from the Reserve Bank adding hundreds of dollars a month to the cost of an average mortgage. A few weeks back, money markets were tipping official rates at more than 4 per cent by mid-next …

Interest rates are rising: Is the RBA at fault for allowing Australians to take on too much debt?
2 years, 8 months ago

Interest rates are rising: Is the RBA at fault for allowing Australians to take on too much debt?

ABC  

Can we blame Australians for being a little confused about the Reserve Bank's messaging on interest rates? Towards the end of 2020 and for nearly all of last year, Reserve Bank Governor Philip Lowe said interest rates would not likely rise until 2024. In November and December 2020, Dr Lowe said in the bank's monetary policy decision statement that the …

Australian central bank hikes rate for 2nd time in 5 weeks
2 years, 9 months ago

Australian central bank hikes rate for 2nd time in 5 weeks

Associated Press  

CANBERRA, Australia — Australia’s central bank on Tuesday lifted its benchmark interest rate for a second time in five weeks, changing the cash rate to 0.85% from 0.35%. When the Reserve Bank of Australia’s lifted the rate by a quarter percentage point at its last monthly board meeting on May 3, it was the first rate hike in more than …

Reserve Bank of Australia warning of more interest rate rises as inflation soars
2 years, 10 months ago

Reserve Bank of Australia warning of more interest rate rises as inflation soars

Daily Mail  

Australian home borrowers are expected to be hit with an even bigger interest rate rise in June as inflation soars at an even faster pace than anticipated. Australian home borrowers are expected to be hit with an even bigger interest rate rise in June as inflation soars at an even faster pace than anticipated On Friday the 13th last week, …

Australia's cost of living crisis: Lettuce more expensive than a cheeseburger as inflation hits 5.1%
2 years, 10 months ago

Australia's cost of living crisis: Lettuce more expensive than a cheeseburger as inflation hits 5.1%

Daily Mail  

Australia's cost of living crisis has reached dire heights as soaring prices for everyday items make fresh vegetables more expensive than fast food. The nation's annual inflation rate this week jumped to 5.1 per cent - the highest in 22 years - as wage growth stagnates and demand for essential goods outstrips supply due to global and local shortages. Australia's …

Australia's inflation shock will have Morrison contemplating an interest rate rise – and his political future
2 years, 10 months ago

Australia's inflation shock will have Morrison contemplating an interest rate rise – and his political future

ABC  

The last time interest rates rose during an election campaign was in 2007. Morrison even produced a chart to demonstrate how much higher inflation is in other countries compared to "what the markets are estimating at 4.5 per cent in Australia". Frydenberg blames inflation on COVID, Ukraine war Photo shows A close up of a man speaking at a lectern …

Australian inflation surges to the highest level in 21 years
2 years, 10 months ago

Australian inflation surges to the highest level in 21 years

Daily Mail  

Australia's inflation has surged by 5.1 per cent - the fastest pace in 21 years - sparking fears interest rates could rise as soon as next week. Scroll down for video Australia's inflation has surged by 5.1 per cent - the fastest pace in 21 years Australia's inflation soars to 21-year high Consumer price index in the year to March …

Australia’s prices surge at fastest pace in two decades
2 years, 11 months ago

Australia’s prices surge at fastest pace in two decades

Al Jazeera  

Australian consumer prices surged at the fastest pace in two decades during the last quarter as petrol, home building and food costs climbed, raising speculation of an interest rate hike as soon as next week. “The combination of above-target inflation, an economy initially resilient to hikes and a more hawkish reaction function skews risks to a steeper and higher path …

Federal Budget 2022: Australia's debt to pass $1TRILLION, costing $39,495 per person
2 years, 11 months ago

Federal Budget 2022: Australia's debt to pass $1TRILLION, costing $39,495 per person

Daily Mail  

Australia's government debt is set to surpass the $1trillion mark in the coming year for the first time, with Tuesday's Budget expected to bring in even more spending to tackle the rising cost of living. Inflation is now running at 3.5 per cent, a level well above the Reserve Bank of Australia's 2 to 3 per cent target. With average …

Why Australia's Reserve Bank won't hike interest rates just yet
3 years ago

Why Australia's Reserve Bank won't hike interest rates just yet

ABC  

The biggest question relating to the management of the economy right now has nothing to do with next week's budget. When inflation climbs above 3 per cent the board hikes interest rates to bring it back down to somewhere within the bank's target band of 2-3 per cent. Here's how the bank itself puts it: If the economy is growing …

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