Australians face “significantly higher” inflation challenge

06 Jun 2022

Consumer prices in Australia have risen this quarter compared to the 5.1% from the first three months of the year, heightening pressure on households and signalling the likelihood of further rate hikes.

Treasurer Jim Chalmers commented on Sunday: “It's now really clear that the inflation challenge that Australians are facing is worse. People should anticipate that it will be higher than it is now. Significantly higher.”

Australia is currently grappling with skyrocketing energy prices that swept across the United States and Europe following the Russian invasion of Ukraine and heightened inflationary pressures, reports Business Times.

The country’s central bank is due to meet on Tuesday and is forecast to carry out consecutive rate increases for the first time in 12 years as it attempts to lower prices.

At the start of last month, the Reserve Bank of Australia (RBA) forecast inflation will reach 6% by the end of the year, before edging down to 3% by the middle of 2024. It aims to hold inflation within a 2-3% range in future.

Jim Chalmers has been campaigning on rising living costs. Q1 inflation was over double the 2.4% pace of pay gains, leading to the largest fall in real wages in around two decades.

"This is the defining challenge in the economy," he said during the interview. "Not easily fixed, not easily addressed. But a challenge, which is even more substantial than my predecessors fessed up to."

Australia’s economy has experienced solid growth, with unemployment at its lowest point in 48 years. However, government debt remains at record levels after hefty spending to bolster the economy during the Covid crisis.

The Treasurer, who plans to deliver a budget in the second half of October, added that it would “implement our commitments and our economic plan to try to get the economy growing faster, without adding to these inflationary pressures.”