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According to the Australian Bureau of Statistics, consumer price inflation has returned to a 32-year high after dipping to 6.9 percent in October. In November, retail sales reached an 11th consecutive record month, reducing the likelihood of the Reserve Bank of Australia pausing interest rate increases.The Reserve Bank of Australia raised the cash rate by 25bps to 3.1% at its final meeting of 2022, matching market forecasts. The move marked the eighth straight rate hike, taking borrowing costs to a level not seen since November 2012, with the board flagging more rate hikes ahead as inflation in Australia is too high.
Prior to Wednesday, Australian economists had hedged their bets about the RBA's February rate hike, with some predicting a pause for a month while the RBA digested the decision. However, the facts were not as expected.
Inflation has taken off again to reach 7.3 per cent. The CPI boost was driven by home building costs, which were up 9.6 per cent, almost entirely due to a near 18 per cent rise in material costs; food and beverage costs were up 9.4 per cent; and transport, up 9 per cent.
Marcel Thieliant, senior economist at Capital Economics said the strong inflation and retail trade results would prompt the RBA to press ahead with interest rate rises at its February meeting.
What is your opinion regarding inflation hitting 7.3 percent?
💡Share Your Insights
Please leave a message in the comments section of this post, and share your insights about inflation.💸💸💸
- What is your opinion regarding inflation hitting 7.3 percent?
- How much do you expect the Australian Federal Reserve to raise interest rates at its next meeting? 50 or 25 bps? and why？
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⏰Activity Duration
12 January 2023-30 January 2023
Comments
🌟🌟🌟It's really tough going as high inflation has really hit the pockets of all Australians. There is nothing that has not gone up from housing, fuel, food, services and the real wages of the average Aussie have not kept up with inflation.
At 7.3%, it is the highest in years. This means that the RBA will likely have to raise interest rates further in 2023. The RBA has to strike a delicate balance of raising interest rate just enough to lower high inflation but not too much as to cause a severe recession.
I believe that the RBA will press ahead with 25 basis point rate hike in February. However if high inflation continues to trend upwards, then the cash rate may even go up to 4% or higher.
I feel the pain of many Aussies who have to pay increasing mortgage payments. I believe with high inflation, it is important to stay invested in a diversified portfolio of assets such as stocks, properties, otherwise the value of our hard earned dollars will be eroded.
@Tiger_AU
For many Australians, this increase in prices is making it difficult to make ends meet. This is particularly true for low-income households and those on fixed incomes, who are being hit the hardest by the rising cost of living.
If nothing goes wrong, RBA is expected to hike 25bps in Feb. Current rates are already lagging US. Higher interest rates can have a number of negative effects on the economy, including slowing down economic growth and making it more difficult for businesses to borrow money. However, these measures are necessary to combat inflation and protect the Australian economy in the long-term