Inflation is set to reach a three-year high, with warnings that the Australian economy could be in the grip of stagflation, driving more than 100,000 people out of work within months. Source: The Age.
The Australian Bureau of Statistics will today release the March consumer price index with analysts united in expecting a petrol-induced surge in prices that will take the overall inflation rate towards 5 per cent.
Inflation is on track to hit a three-year high amid warnings the economy will slow and unemployment climb.
Petrol prices jumped by 37 per cent last month before the Albanese Government’s cuts to fuel excise, and a ramp-up in petrol supplies across the country, started to push down prices, which are now about 6 cents a litre above their pre-war level.
The lift in petrol and diesel prices quickly fed through to the broader transport system, translating into higher costs for everything from construction materials to supermarket staples. Analysts believe inflation in March alone could rise by up to 1.5 per cent.
Not only is overall inflation expected to climb, but the closely watched measure of underlying inflation, which the Reserve Bank believes gives a better indication of overall price pressures in the economy, is also expected to surge.
Senior Westpac economist Pat Bustamante said inflation is on track to hit 5.4 per cent by the middle of the year, which would be the highest rate since mid-2023.
That increase in prices would be accompanied by a slowdown across the economy.
Not only would the economy be slowing as prices climbed, unemployment – currently 4.3 per cent – is forecast to increase to 5 per cent.
At 5 per cent, an extra 120,000 Australians would be looking for work during a period of slowing growth and increasing inflation – the traditional definition of stagflation. Australia has not experienced stagflation since the oil shocks of the 1970s.
The May 12 budget is expected to include tax reforms, spending cuts, and a suite of measures aimed at boosting the economy’s growth rate without adding to inflation.
Prime Minister Anthony Albanese yesterday said the budget would focus on building resilience across the economy.
“Resilience is about social cohesion and giving people that sense of ownership over the economy, making sure that the economy works for them, not people working for an economy,” Mr Albanese said.
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Grim warning for workers with inflation set to hit a three-year high (By Shane Wright, The Age)
