Economists are yet again warning of further inflation rises in Australia which will likely lead to yet higher interest rates.
Inflation, interest rates and the cost of living are all on the rise, while wages keep lagging and will not increase accordingly to match the rises for at least another 18 months.
The cost of living is affecting more families every month, while the price of rent and mortgage repayments continue to increase affecting the household budget. To rub salt to the wound, there’s the increasing everyday costs including fuel, fresh food and energy costs. Australian households are feeling the pain from every angle and dismayingly, the pain is predicted to be amplified.
Consumer prices increased a further 1.8 per cent in the quarter ending in September with the highest rise in gas prices and new housing. The Australian Bureau of Statistics reveals that in the past year, there was an increase of 7.3 percent nationally, which is the highest rise in over 30 years.
With natural disasters including floods, world politics and wars in conjunction with national economic policy, the Reserve Bank and Government policy; it is predicted to get even tougher.
There are further predictions of interest rate hikes this year; not one but most likely two hikes are predicted before Christmas. Further rising interest rates with the rise in inflation, fuel and energy costs and the overall cost of living, will further affect and burden the many Australians that are already feeling the pressure. Treasury has indicated that inflation will be at 7.75 per cent by the end of the year which will not be matched with the current stagnant wages. However, economists advise that if wages were to increase, that inflation will continue to rise and that the Reserve Bank will need be even more aggressive on interest rates; it’s a catch 22 scenario unfortunately, with no quick and easy solution.
The government has somewhat tried to tackle the cost of living and the recent budget outlined a few proposed measures, including childcare subsidies over the next 4 years, proposing to expand paid parental leave to 26, there’s the ongoing tackling of the affordable housing issue and the most painful burden of inflation and the stagnant wages. The key question is, is it too little, too late and when will we get a sign of relief?