Inflation surged 6.1 per cent over the 12 months to the June quarter, revealing the toll on Aussie budgets from rising prices.
The Consumer Price Index (CPI) rose 1.8 per cent in the June 2022 quarter and 6.1 per cent annually, according to the latest inflation data from the Australian Bureau of Statistics (ABS).
The most significant price rises were in new dwelling purchases by owner-occupiers (+5.6 per cent), automotive fuel (+4.2 per cent) and furniture (+7.0 per cent).
The figures were below expectations of an annual inflation rate of 6.2 per cent.
This follows a 5.1 per cent annual increase and 2.1 per cent rise in the March 2022 quarter.
Inflation has been soaring around the globe due to the conflict in Ukraine pushing up commodity and fuel prices.
This has driven up the costs of manufacturing goods and transporting them to where they need to go.
The low unemployment rate of 3.5 per cent has also been exerting upward pressure on wages, prompting businesses to charge more for their goods and services.
It will now be all eyes on the Reserve Bank of Australia’s August 2 meeting, with further hikes to the 1.35 per cent cash rate expected.
ANZ recently revised its cash rate forecast, predicting there would be four more 0.50 per cent hikes in the next four months, taking the cash rate to 3.35 per cent by November.
The Commonwealth Bank of Australia also recently revised its interest rate predictions, and now expects a 0.5 per cent hike in both August and September.
Under these scenarios, variable mortgage holders face steep increases in their repayments.
Canstar finance expert Steve Mickenbecker said homeowners would be wise to start cutting costs now to prepare for the higher repayments, and recommended hunting around for a better deal.
“Rising interest rates should put a lower-cost home loan at the top of every borrower’s shopping list,” Mickenbecker said.
Light at the end of the tunnel
Impact Economics and Policy economist Angela Jackson told ABC Radio this morning that inflation had been moving at roughly the same rate as in the March quarter, which had produced the higher annual figure.
“We have been used to - over the past two or three decades - inflation in that 2-3 per cent range,” Jackson said.
“But it is important to remember that not only is it backwards looking, but also hopefully what we are seeing is that inflationary pressures are leveling off.”
Food prices have been soaring
Last quarter, the CPI data revealed higher inflation for non-discretionary items. These are items people can’t live without, including food, shelter and health care.
Detailed grocery data released by Frugl ahead of the CPI figures showed weather events, supply chain issues and high commodity prices were driving up the cost of food.
Beef had seen the sharpest increase in 12 months, soaring by 14.6 per cent, followed by household and cleaning product prices, which had rocketed up by 13.67 per cent in the 12 months to June.
The data also showed price hikes were hurting some shoppers more than others, with single professionals hit hardest by grocery price increases.