Inflation will rise to highest level in nearly a decade

Australia’s inflation rate has increased by 3.5% in the 12 months to the end of the fourth quarter of 2021. (Source: Getty)

ANZ’s head of economics, David Plank, said soaring petrol prices were putting pressure on consumers, leaving them “struggling” to cope with low wage growth and inflation. pretty high.

Australian consumers are increasingly worried about the health of the economy in the coming years, he said. Many people have become more hesitant to spend on large asset classes. It is the decline in consumer confidence that will create short-term risks to the spending outlook of households.

According to Consumer Price Index (CPI) data, Australia’s inflation rate has increased by 3.5% in the 12 months to the end of the fourth quarter of 2021.

Due to the impact of the Covid-19 epidemic, plus the impact of the Russia-Ukraine conflict causing a spike in world oil prices, and the severe flooding that has just occurred in New South Wales and Queensland, commodity prices of the “country of kangaroos” has increased rapidly in recent years, especially in consumer goods.

Commodity prices and rising inflation boosted expectations among economists and financial markets that the Reserve Bank of Australia (RBA) would quickly consider raising interest rates ahead of time.

However, earlier this month, despite warning that Australia’s annual inflation rate could reach at least 4 per cent, RBA Governor Philip Lowe insisted the central bank would keep interest rates on hold. at a record low of 0.1% and has not considered raising interest rates in the near future,

Speaking in Sydney on March 22, Dr Lowe said the RBA would not change its policy until there was “spreading price pressure”. Australia’s monetary policy regulator is closely monitoring signs on the job market, labor costs and consumer perceptions of inflation before taking any new policy actions.

Australia is currently on the verge of a federal election, scheduled to be held in May. On March 29, Prime Minister Scott Morrison’s government will announce the federal budget plan for 2022-2023. , with a supposed focus around the rising cost of living.

Some Australian media reported that Treasurer Josh Frydenberg was considering the possibility of reducing the import tax on gasoline, currently at 44 cents AUD/liter.

Speaking on March 22, Prime Minister Morrison said, Canberra is closely monitoring the effects of the Russia-Ukraine crisis on fuel prices, especially oil prices, which drive costs up. That requires the government to make the right decisions in addressing the cost-of-living pressures that Australians are facing across the country.