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Australia: Inflation hits 32-year high, grows thrice faster than wage

Author : Pankaj Singh | Published Date : 2022-10-26 

Australia: Inflation hits 32-year high, grows thrice faster than wage

Australia's inflation rate reportedly soared to a 32-year high in the fourth quarter as the price of home construction and gas increased, fueling calls for the nation's central bank to resume more rate hikes.

On Wednesday, the consumer price index or CPI data from the ABS (Australian Bureau of Statistics) revealed a 1.8% increase in the September quarter, exceeding 1.6% market expectations.

The yearly rate increased sharply from 6.1% to 7.3%, the highest level since 1990 and over three times the rate of income growth.

The reduced mean, a closely monitored indicator of core inflation, hiked by 1.8%, far above the estimated 5.6%, bringing the annual growth rate to 6.1%.

This raises trouble for the Reserve Bank of Australia (RBA), which had expected core inflation to spike at 6.0% in the last quarter, with CPI peaking at 7.75%.

Instead, with the ABS' new monthly CPI spiking in September, economists were warning that both headline and core inflation were set to hike substantially higher this quarter.

It is particularly unfortunate for the RBA because, after four adjustments of 50 basis points this month, it surprised most by decelerating to a quarter-point rate hike.

The RBA wanted to increase rates more gradually to see how the abrupt tightening was affecting consumer spending because rates have already increased by 250 basis points since May.

Futures still anticipate a quarter-point increase to 2.85% on November 1, but there is now some possibility of a half-point rise in December as well as a high for rates near 4.20% in July.

It is also expected that the European Central Bank and Bank of Canada will both raise interest rates by 75 basis points this week, and the Federal Reserve will likely do the same on November 2.

There are concerns that the recent flooding in eastern Australia may cause food prices to hike even more. Retail operator Coles has warned of decreased volumes in fresh produce, where prices are already 8.8% higher than they were a year ago.

Source credit: https://www.straitstimes.com/asia/australianz/australia-inflation-races-to-32-year-high-almost-3-times-the-pace-of-wage-growth

About Author

Pankaj Singh . .

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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