Australia’s Inflation Reached A New Height, Increasing the Possibility of New Cash Rate Hike
The #Australian Bureau of Statistics revealed the annual rate increased to 7.8 percent in the year to December, the highest peak since 1990. The Consumer Price Index also increased by 1.9 percent for the quarter.
#Electricity trailed with an increase of 8.6 percent, and international travel and accommodation came in at 7.6 percent.
It is very high #inflation by historical standards,
Treasurer Jim Chalmers told reporters. There’s no use pretending otherwise. It’s unacceptably high, he admitted.
But Mr. Chalmers is hopeful inflation has peaked in the wake of the higher-than-anticipated economic data released on Wednesday.
All eyes will now turn to the Reserve Bank, which is expected to lift the cash rate for a ninth consecutive time to combat inflation.
#Economists are now saying that the increase of the basic money rate beyond the current 3.1 percent is likely on February 7. The central bankers may even resort to a 50 percent basis point.
The Central Bank has so far thrust eight consecutive rate rises onto households after sitting at a historic low of 0.1 percent in April 2022.
But the Central #Bank’s decision will not be simple. As #Deloitte Access Economics’s #Business Outlook report cautioned on Monday that the nation’s “consumer-led recovery is rapidly running out of road”.
As TheOwner emphasised several times, the long-term threat to the Australian #economy is an excessive #energy price.
Until the #government improves competitiveness in the energy market, the price will move only in one direction – up.
The consequences are prospective #investment passing by the country and possible mass lay-offs if the profitability of the companies does not improve.