Record-Breaking Eighth Consecutive Rate Increase From The Reserve Bank Of Australia: Treasurer Jim Chalmers Cautions Inflation Expected To Worsen

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Inflation has already surged to a 32-year high, yet it could worsen. Get ready for the areas where prices are expected to rise the most.

This week, Australians were dealt their eighth successive rate increase from the Reserve Bank of Australia. Still, according to Federal Treasurer Jim Chalmers, it might bring about even more financial distress for them.

During an interview, Chalmers stated that the soaring inflation prompting the RBA to raise its cash rate has yet to reach its peak.

As inflation soars, the cost of goods and services rises faster than people’s wages, reducing their buying power. Workers demand steeper wage hikes that, in turn, drive up companies’ operating costs–threatening layoffs.

According to the Reserve Bank of Australia (RBA), “consumers’ purchasing power – the real value of money – is diminished.”

Countries can become significantly less competitive in the global market when their goods and services are more expensive than similar products from other countries. It was powerfully demonstrated during Australia’s 1970s and 1980s, inflation rose as high as 18%. The result of this was a hard-learned lesson for many Australians.

It eroded people’s savings, distorted resource allocation, and increased inequality in our society,” He delivered his address to the CEDA annual dinner audience last month.

High inflation meant lower growth, fewer jobs, and lower real wages. Another lesson from these decades is that bringing inflation back down again after it becomes ingrained in people’s expectations is very costly and almost certainly involves a recession.”

In terms of spending, we are seeing the beginnings of a softening, and we had a softer monthly inflationary number, but that doesn’t yet factor in some of these energy price rises that we’re expecting, plus some of the impacts of the flooding on grocery prices, so we’re cautious,” he tells the interviewer.

Inflationary pressures remain a considerable challenge for the economy, with energy costs at the forefront. According to the Australian Bureau of Statistics’ September quarterly report, gas and other household fuels had one of the three most significant price rises at 10.9%. The issue is exacerbated by global developments like Russia’s invasion of Ukraine that have pushed up energy prices in many parts of the world.

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