Inflation tipped to reach three-decade peak

HOUSEHOLD budgets are set to come under increased stress for the rest of this year with inflation tipped to continue rising.

Australia’s central bank and federal treasurer each delivered the sobering prediction of a 7.75 per cent cash price index at its upcoming peak towards the end of this year, which would be the highest figure since 1990.

Australian Bureau of Statistics quarterly data revealed that inflation had risen by 1.8 per cent to 6.1 per cent in the year to June, emphasising the strain families have experienced for cost of living.

“Inflation is high and rising and global growth is slowing and both of these things have a direct impact on Australians and their living standards,” Treasurer Jim Chalmers told Canberra reporters.

“We are not surprised to see inflation north of six per cent but it’s still confronting.

“It’s not news to millions of Australians who feel this inflation challenge every time they go to the supermarket and every time the bills arrive.”

Dr Chalmers predicted an electricity price rise in July would have a negative impact on the current quarter’s results, while the government is yet to decide if it will extend a fuel excise cut beyond its scheduled end date in late September.

Grocery aisles have been among the locations that Australians have felt rising costs, with food categories costing between five and 11 per cent more than a year ago.

Australian Food and Grocery Council chief executive officer Tanya Barden said rising input costs related to supply chain disruptions, COVID-19 and international factors would likely push prices up further in coming months.

“I know that businesses are going for second and third round increases because of this continuous impact of input inflation,” Ms Barden said ahead of last month’s inflation figures.

“Also, supermarket retailers themselves have significant costs that they are needing to cover, both through COVID but also some of the profitability expectations that have built through that period and then back into the supply chain – transport and logistics, the agricultural community – are all looking at how they can pass some of these costs on.”

Reserve Bank governor Philip Lowe last week predicted inflation to hit 7.75 per cent this year, before stabilising to four per cent next year and to the target rate of around three per cent by 2024.