Why the latest inflation figures are bad news for Aussies struggling with the cost-of-living crisis
- Inflation rose 3.8 percent in the year to June
Home borrowers face another interest rate hike as inflation rises again.
The consumer price index rose 3.8 percent in the year to June, still above the Reserve Bank’s target of 2 to 3 percent.
The latest inflation figures are even worse than the 3.6 percent annual rate in the first quarter, fueling fears that the RBA will raise interest rates despite borrowers already facing the steepest increases since the late 1980s.
Alcohol and tobacco saw the largest price increases at 6.8 percent, followed by insurance and financial services at 6.4 percent and health care at 5.7 percent.
A new rate hike would take the cash rate to 4.6 percent, the highest level in 13 years. This would be the 14th increase in just over two years.
Inflation has been above the Reserve Bank’s target for three years as Sydney, like Melbourne, remains in a prolonged lockdown due to Covid.
The consumer price index rose 3.8 percent in the year to June, further exceeding the Reserve Bank’s 2-3 percent target (pictured are Sydney residents)
The latest figures have fuelled fears the RBA could raise interest rates despite borrowers already facing the most aggressive hikes since the late 1980s (pictured, a Coles customer)
Since the Reserve Bank began raising rates in May 2022, borrowers’ monthly mortgage payments have increased by 68 percent.
Higher inflation means that social benefits increase faster due to indexation.
But it also means that excise duties on alcohol and fuel will rise faster.