According to the latest data from the Australian Bureau of Statistics (ABS), inflation rose by 7.8 per cent in 2022. This figure is in line with the Treasury’s October budget forecast, which predicted inflation would peak at 7.75 per cent in the December quarter, and the Reserve Bank of Australia’s (RBA) forecast peak of 8 per cent in the December quarter.
While these figures are unacceptably high, there are some signs that inflation may have peaked. However, it will not be confirmed until data for the March quarter is released. The main drivers of price increases in the last quarter were domestic holiday travel and accommodation, electricity, and housing.
These figures demonstrate the pressure on the budgets of Australian families caused by the war in Ukraine, lingering pressures on global supply chains, and other challenges that have been ignored for too long. Inflation is currently the primary challenge in the Australian economy, which is why the RBA has raised interest rates eight consecutive times since before the election.
While further monthly data and the figures from the March quarter will provide more information, it is expected that inflation will moderate over the course of this year. There have already been a number of price pressures that have started to ease, including shipping costs and housing costs. However, price pressures will still remain higher than desired for longer than desired.
The government’s economic plan will continue to focus on the inflation challenge and growing the economy in a responsible manner in 2023. The government’s energy relief package is beginning to take some of the edge off increasing energy prices. The government is also working to address the previous government’s failure to address supply side issues which are compounding the inflation challenge.
The government is getting wages moving again in responsible ways, including supporting wage rises for workers on minimum and award wages and for aged care workers, and by fixing the broken bargaining system. The government is also providing cost-of-living relief for electricity bills, child care, and medicines. Additionally, the government is delivering on its commitments to boost the capacity of the economy with meaningful investments in cleaner and cheaper energy, the digital economy, and manufacturing.
It is understood that Australians are finding it difficult, which is why the government will continue to work hard to provide responsible cost-of-living relief, deliver essential services, and build a stronger and more resilient economy for the future.
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