Australia’s high inflation rate is being significantly impacted by rising housing costs, according to MLC senior economist Bob Cunneen. Electricity prices have surged by more than 30 per cent over the past year, contributing to the inflationary pressure. Additionally, increases in dwelling and rental costs are exacerbating the problem, keeping inflation well above the Reserve Bank of Australia’s (RBA) target range of 2 to 3 per cent. MLC is a financial services company that offers investment, superannuation and insurance products. MLC aims to help Australians with their financial planning needs.
Cunneen highlighted the implications of these persistent price pressures for monetary policy. “This is a concern for the Reserve Bank, as it shows persistent inflation that is well above their 2 to 3 per cent target.” Given these circumstances, the Reserve Bank is likely to maintain a hawkish stance.
The economist suggests that further action from the RBA is anticipated to combat inflation. “Accordingly, the Reserve Bank’s finger remains on the interest rate trigger, given these persistent price pressures,” he stated. Consequently, Australian consumers and businesses should prepare for potential adjustments to borrowing costs in the near future. “Another interest rate rise is on the horizon for Australia.”