Australia's inflation has surged to 3.8%, beating economists' expectations and putting further pressure on the Reserve Bank to raise interest rates next week. The latest figures from the Australian Bureau of Statistics reveal that households are facing a tough battle to contain rising consumer prices.
The strong underlying price growth, particularly in housing costs and power bills, has contributed to the increase. Housing costs rose by 3.9% annually, with electricity prices surging by 21.5% due to the expiration of subsidies in Queensland and Western Australia. This led to inflation running hot in Brisbane at 5.2% and Perth at 4.4%.
The government's efforts to mitigate the impact on households have been highlighted by Treasurer Jim Chalmers, who denied that increased spending was driving up inflation. Instead, he pointed to a private sector recovery, which is expected to kick in by 2025.
However, opposition leader Sussan Ley took a different view, stating that families are struggling under Labor's policies and the cost of living is getting worse, not better.
The Reserve Bank is set to raise interest rates for the first time since November 2023 at its upcoming policy meeting. While ANZ economists initially predicted only a single "insurance" tightening, they now believe a series of rate hikes may follow, citing higher-than-expected inflation figures.
In response to the latest data, the probability of a rate hike has jumped to 75%, according to NAB. The Aussie dollar has also rebounded above US70 cents as investors become more optimistic about future interest rate moves.
The central bank's preferred quarterly trimmed mean measure still shows a substantial 3.4% lift in inflation through the year, from 3% in the September quarter. While some economists have expressed surprise at the stronger-than-expected growth, others believe it reflects a longer-term trend and that the Reserve Bank may need to act sooner rather than later to control inflation.
With the government's spending programs set to continue, investors are bracing themselves for further rate hikes in the months ahead.
The strong underlying price growth, particularly in housing costs and power bills, has contributed to the increase. Housing costs rose by 3.9% annually, with electricity prices surging by 21.5% due to the expiration of subsidies in Queensland and Western Australia. This led to inflation running hot in Brisbane at 5.2% and Perth at 4.4%.
The government's efforts to mitigate the impact on households have been highlighted by Treasurer Jim Chalmers, who denied that increased spending was driving up inflation. Instead, he pointed to a private sector recovery, which is expected to kick in by 2025.
However, opposition leader Sussan Ley took a different view, stating that families are struggling under Labor's policies and the cost of living is getting worse, not better.
The Reserve Bank is set to raise interest rates for the first time since November 2023 at its upcoming policy meeting. While ANZ economists initially predicted only a single "insurance" tightening, they now believe a series of rate hikes may follow, citing higher-than-expected inflation figures.
In response to the latest data, the probability of a rate hike has jumped to 75%, according to NAB. The Aussie dollar has also rebounded above US70 cents as investors become more optimistic about future interest rate moves.
The central bank's preferred quarterly trimmed mean measure still shows a substantial 3.4% lift in inflation through the year, from 3% in the September quarter. While some economists have expressed surprise at the stronger-than-expected growth, others believe it reflects a longer-term trend and that the Reserve Bank may need to act sooner rather than later to control inflation.
With the government's spending programs set to continue, investors are bracing themselves for further rate hikes in the months ahead.
Australia's economy is really struggling now... inflation is getting out of control and people are feeling the pain 
. Housing costs and power bills are killing it 
. The Reserve Bank needs to step up its game, but I'm not sure if they'll be able to tame this beast 
. Interest rates might go up again soon, which means more pain for regular folks 
. Can't wait to see how the government responds to this... not like it's going to change anything 
.
! I mean, 3.8% is a big deal, and it's not just the usual suspects like housing costs and power bills that are driving it up – it's the whole package, fam. And don't even get me started on the Aussie dollar bouncin' back above 70 cents 
. That's a good sign for investors, but also means they're gonna be payin' more interest rates in the future.
.
anyway i was watching a video the other day about avocados and did you know they're not as expensive in mexico as they are here lol what's up with that? 
anyhoo back to inflation stuff do u think interest rates will be high enough to slow it down or will we just keep going up and up like a never ending escalator? 
I feel like these Aussie households are just getting slammed on all sides 
. Housing costs and power bills are on fire 
! 
Reserve Bank's gonna need to step up its interest rate game 
! 75% probability of a rate hike? 
.
. Housing and power bills are killing it, and the Reserve Bank is gonna have to step in 
. I'm not surprised at 3.8% inflation, but a 4th hike already? That's steep 
, but it doesn't seem that convincing when you see those numbers 
. And Ley's right, too - the cost of living is getting outta control for families 
. It's time for some real action from the Reserve Bank.
. Will they do a single 'insurance' tweak or go all in on higher rates? That's what I'm keeping an eye on 
.
. I'm all for a strong private sector recovery, but this just means more pain for families with lower incomes, you know? 
. I hope they can find a balance between keeping the economy growing and helping people keep their money 
The thing is, I think we're living in a time where everyone expects price rises and nobody really wants to take responsibility for it. Like, 'it's not our fault the economy is doing well' 
when the opposite is happening - people are spending more, and therefore prices are rising.
, interest rates are gonna be a real challenge for people...
. I don't buy it, though - if private sector recovery is really the answer to lower inflation, then why did we have a recession in 2023? 
so the Aussie economy is like my aunt's cooking - it's getting a bit too spicy! 3.8% inflation is like, woah, that's hot 
The Reserve Bank better bring their A-game (or should I say, A-rate game? interest rate puns are my love language 
Like what if it just causes a recession? We need some fiscal stimulus not more interest rates 
. I mean, come on, people - we've been living in a bubble for years! When the interest rates start rising again, get ready for some serious economic pain 
. And with no clear end in sight, it's no wonder ppl are worried about their future financial stability 
. We'll have to see what the Reserve Bank decides next week, but I hope they're able to find a balance between keeping inflation under control and supporting ppl during this tough time 
. and yeah the reserve bank should def raise interest rates like its not rocket science 