Michele Bullock, the new Reserve Bank governor, has been criticized for suggesting Australians cutting their hair are responsible for high inflation.
With inflation still high at 5.4 percent, Ms Bullock said domestic demand for services was now the main driver of high prices.
“Inflation is driven by domestic demand and increasingly supported by services,” she told a dinner of Australian business economists in Sydney on Wednesday.
‘Hairdressers and dentists, eating out, sports and other recreational activities – the prices of all these services are rising sharply.’
Tony Windsor, a former independent member of federal parliament, joked that bald men like him were leading the fight against inflation.
“Breaking…Bald people must lead the fight against inflation,” he told his X followers on Thursday morning.
Michele Bullock, the new Reserve Bank governor, has been criticized for suggesting Australians cutting their hair are responsible for high inflation
One follower joked that people without much hair could avoid paying tax on their company car.
“Also a good way to avoid the fringe benefits tax,” he says.
Windsor, who previously held the seat of New England in northern New South Wales, joked that banks could reward bald customers for doing their bit to keep inflation low.
“You are entitled to a lower mortgage rate,” he said.
Ms Bullock said high inflation was now a problem beyond rising petrol and electricity prices.
“So inflation is much broader than just rising prices for petrol, electricity and rents – prices are rising sharply for the majority of the goods and services we all consume,” she said.
The Reserve Bank of Australia this month raised interest rates for the thirteenth time in eighteen months, bringing the cash rate to a twelve-year high of 4.35 percent.
Inflation is now expected to take longer to moderate, with the RBA forecasting a return to the top of the two to three percent target range at the end of 2025, rather than mid-2025 as recently predicted in August.
Spending on services, classified as recreation and culture, rose 5.6 per cent in the year to September, data from the Australian Bureau of Statistics’ Consumer Price Index shows.
Spending data from Commonwealth Bank’s 10 million customer accounts supported the RBA’s observation, with older baby boomers and younger millennials both spending more on services.
With inflation still high at 5.4 per cent, Ms Bullock said domestic demand for services is now the main driver of high prices (pictured is a stock photo of a hairdresser)
Baby boomers, or people age 65 and older, spent 17 percent more on travel and 11 percent more on dining out, while their overall spending rose 6 percent.
Millennials spent 13 percent more on entertainment, while their overall spending fell 5.1 percent, including a 3.7 percent decline in daily essentials.
Credit monitoring company Experian has also revealed that two-thirds of credit managers surveyed had already seen an increased risk of consumer defaults and hardship in the past six months.
Borrowers who have taken out a loan since 2019 are also three times more likely to default than someone who took out a mortgage in 2015.