inflation Experts fear the worse could be happening, with Australian consumers worried about prices rising and remaining high for two years.
big banks are expecting official consumer price Index Data for the June quarter, due Wednesday morning, showed headline inflation rising to the fastest level in 32 years.
Both ANZ and NAB expect inflation for the June quarter to climb at an annualized pace of 6.3 per cent, the highest since 1990.
Commonwealth Bank is forecasting a CPI growth of 6.2 per cent while Westpac is forecasting a growth of 6.1 per cent.
Ordinary Australian consumers are even more concerned with last week’s weekly ANZ-Roy Morgan consumer survey of 1,496 people, showing expectations of an average inflation rate of six per cent over the next two years.
Ordinary Australian consumers are concerned with the weekly ANZ-Roy Morgan consumer survey of 1,496 people taken last week, showing expectations of an average inflation rate of six percent over two years’ time.
This is even worse than the 5.1 per cent in March, which was the worst since 2001, a year after the GST was implemented.
Inflation Expectations for the June Quarter
anzu: up 6.3 percent
NAB: up 6.3 percent
Commonwealth Bank: up 6.2 percent
westpac: up 6.1 percent
Reserve Bank of Australia Governor Philip Lowe has spoken of an ‘inflation psychology’ where expectations of higher prices cause consumers to spend, fearing that prices will continue to rise.
This forces businesses to, in turn, raise their prices.
Lowe said, “If inflation expectations rise and businesses and workers expect higher rates of inflation on an ongoing basis, it will be harder to get inflation back on target – to do so with higher interest rates and a sharp decline in spending.” will be required.” Last week.
Covid isolation regulations and global supply chain constraints have pushed inflation well above the Reserve Bank of Australia’s target of two to three per cent.
Russia’s invasion of Ukraine in late February pushed national average petrol prices above $2 a liter, but this week, they’ve dropped to $1.80 a liter.
In late March, a month after the invasion, an ANZ-Roy Morgan poll expected consumer inflation to be 6.4 percent in two years’ time.
Big banks are expecting official consumer price index data for the June quarter, which is due on Wednesday morning, to show headline inflation is rising to the fastest level in 32 years (pictured from a barista brewing coffee in Sydney). Going to do)
All major banks are expecting the RBA to increase the cash rate by 0.5 percentage points in both August and September, taking it from a three-year high of 1.35 per cent to a seven-year high of 2.35 per cent.
historical inflation levels
March 2022: 5.1 percent
June 2001: 6.1 percent
December 1990: 6.9 percent
June 1990: 7.7 percent
March 1990: 8.7 percent
June 1987: 9.3 percent
March 1987: 9.4 percent
December 1986: 9.6 percent
June 1983: 11.1 percent
March 1983: 11.4 percent
September 1982: 12.4 percent
Australian Bureau of Statistics Annual Consumer Price Index data released quarterly
But with a bigger-than-expected result of headline inflation on Wednesday, the RBA may raise the cash rate by a whopping 75 basis points to 2.1 percent in August.
The Commonwealth Bank’s head of Australian economics, Gareth Aird, indicated the possibility of a ‘material upside surprise’ in Wednesday’s Australian Bureau of Statistics CPI data.
Since March, the weekly ANZ-Roy Morgan consumer sentiment barometer has been below the key 100-point mark, meaning that the pessimists outnumber the optimists.
Now the score is 82.4 points.
David Plank, ANZ head of Australian economics, said a poor consumer price index in the second quarter would make shoppers even more depressed.
“Headlines about another jump in real inflation is likely to put some pressure on sentiment this week when the CPI Q2 is published,” he said.
ANZ is expecting a 50 basis point rate hike in August, September, October and November which will take the cash rate to a 10-year high of 3.35 per cent.
Should that prediction materialize, a borrower with an average $600,000 mortgage would see their monthly repayment climb to $1,060 in November, compared to what they were paying in May when the RBA cash rate was still at a record 0.1 percent. – Was at a low level.
Australia is facing its worst inflation since 1990, the year when Iraq’s invasion of Kuwait pushed up petrol prices.
It was 6.9 per cent till the December quarter that year.
Dr Lowe has indicated that inflation could reach 7 percent in 2022 for the first time in 32 years.
ANZ is predicting a more severe pace of 7.4 percent, the highest since the June quarter of 1990 when it peaked at 7.7 percent.
Reserve Bank of Australia Governor Philip Lowe (pictured left) talks about an ‘inflation psychology’ where expectations of higher prices drive consumers to spend, fearing that prices will continue to rise
What borrowers can pay every month till November as compared to May
$500,000: $883 up $1,922 to $2,805
$600,000: $1,060 $2,306 to $3,366 . until
$700,000: $1,236 up $2,691 to $3,927
$800,000: $1,413 up $3,075 to $4,488
$900,000: $1,590 from $3,459 to $5,049
$1,000,000: $1,767 up $3,843 to $5,610
The calculation based on the cash rate rose from a record-low 0.1 percent in May to 3.35 percent by November, as predicted by ANZ. Monthly repayment based on Commonwealth Bank’s popular variable rate increased from 2.29 percent to an estimated 5.39 percent