Inflation figures to give big hint on interest rates
Written by admin on July 31, 2024
Aussie households are sweating on new inflation figures to be released on Wednesday morning which could determine where the Reserve Bank goes on interest rates next week.
They’ve already been warned the consumer price index for the June quarter is likely to be stubbornly higher than what the government or the RBA wants, which could mean a hike in the 4.35 per cent rate.
The CPI figure for the March quarter was 3.6 per cent, less than half its peak and much lower than the 6.1 per cent before the Albanese government was elected in May 2022.
But it is still well above the RBA target range of between 2 and 3 per cent.
Monthly CPI figures, while more volatile, have put a scare into mortgage holders by being hotter than expected.
The RBA, which will announce its rates decision on Tuesday, has consistently said it would be willing to raise rates for a 13th time if necessary to bring down inflation.
But that would mean more pain for households who are already suffering under cost of living pressures with the impact of the July 1 stage three tax cuts and new benefits still to flow through.
On Sunday, Treasurer Jim Chalmers warned Wednesday’s figures would likely show “persistent” price pressures in the economy.
Speaking with Sky’s Weekend Business, Dr Chalmers said while inflation had come off “quite substantially” from the peaks of 2022, he expected inflation to remain stubborn high.
“Inflation doesn’t moderate in a straight line,” he said.
“It zigs and zags a bit.”
The Albanese government, which is readying for a federal election by May, is hoping for inflation to come down, reducing the pressure on the RBA to increase the cash rate.
The treasurer said he was confident prices would continue to “moderate” after Wednesday’s reading and come down over time.
More Coverage
Fears of another rate hike and the negative flow-on effect on economic activity have escalated following a hotter-than-expected inflation print on June 2, with the all-important number jumping up to 4 per cent in the year to May, up from 3.6 per cent in April.
The CPI figures will also be released alongside retail trade figures at 11.30am on Wednesday.
RBA governor Michele Bullock will then announce the outcome of the cash rate at 2.30pm next Tuesday, following the board’s meeting.
Read related topics:Reserve Bank
