Tue. Mar 5th, 2024

there’s been another rise in inflation prompting some concerns The Reserve Bank could lift interest rates again consumer Prices rose 6.8 percent in the 12 months to April Which is higher than expected that’s compared with a rise of 6.3 percent over the year to March the jump in inflation is being fueled by significant price Rises and fuel housing food and non-alcoholic beverages let’s get more on the numbers now for my finance reporter David Shaw with me in the studio hi David so the annual number has gone up this isn’t what we wanted is it I know it isn’t Roz so yes our inflation going up to 6.8 percent uh certainly a higher than expected result which has surprised a lot of economists

 I mean on the plus side at least inflation is well past its peak which was reached in December back in December inflation was 8.4 so even with this uh blip this rise we’re still much lower than that point now you mentioned uh fuel prices were a major contributor that’s absolutely correct and that’s uh the reason is I guess the so-called base effect so if we uh you know wind the clock back to April of last year that’s when the fuel excise cut was introduced by the Morrison government to relieve you know budgetary pressure so that’s why uh you know fuel was a lot cheaper then but then that fuel exercise card has still since been Unwound so petrol prices in April 2023 a lot higher than the year before

so that’s why I had that distorting effect of petrol prices being much higher and lifting these inflation figures now as for the housing cost yes for building new homes the cost of Labor and materials continues to be high as well as in the categories of food where there were big increases in bread cereal and dairy costs and non-alcoholic drinks interestingly as I was trying to sport recreational recreational culture and rent

 these also played a big part in lifting the inflation results of 6.8 percent in the year to April so I guess the more positive aspect is if you strip out the volatile items like food and petrol then inflation underlying inflation is down to six and a half percent but a lot of people will focus on that headline figure and that will certainly cause some concern to The Reserve Bank that inflation is not going in the direction that it was after will that they meet next week don’t they next Tuesday what are they likely to do yeah this definitely complicates the picture for The Reserve Bank now I had a quick look at what money markets are betting and uh the thinking now is there’s a 31 Chance The Reserve Bank will lift rates by 25 basis points next week so that probability has increased in the past hour Rose but there’s still a 69 chance they’ll remain on hold which is the majority case but even if they keep rates on hold next month many economists think there will be at least one or two more rate hikes before uh the year ends now I did speak to an economist Stephen coculus a bit earlier today and he says the path to achieving a soft Landing as Reserve Bank puts it uh you know it’s more difficult than the RBA has acknowledged for the RBA it is a narrow path the economy is weakening we know retail sales in volume terms are going backwards and that’s a concern and when we sort of crunch through what the reserve bank’s thinking in terms of economic growth

the labor market how high will unemployment get in this current cycle there’d be areas of concern for them too so as you said that Balancing Act between achieving their inflation targeted and hopefully avoiding recession is a very delicate one at this stage and complicated the picture there was some really weak building approvals data yesterday and recently a week retail sales so it is a tough balancing act for The Reserve Bank so it’s very difficult to protect uh.

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