The ABS release of annual inflation data to the December quarter of 7.8% reveals many Australians will be paying more for housing with rapidly rising rents and a likely RBA rate increase at the February 7 meeting, according to the Australia Institute.

“This increase is bad news for Australians struggling with the cost of living, particularly the soaring cost of rents which are rising at the fastest rate in a decade at 3.8%. Mortgage holders also face a likely RBA rate rise in February from these numbers,” said Matt Grudnoff Senior Economist at the Australia Institute.

Key Points:

• 7.8% = Annual inflation to December 2022, a 0.5% increase
• 3.8% = Annual rents are rising at fastest rate in 10 years
• Domestic travel and accommodation rose 19.8% for the year
• Price of Goods (9.5%) is rising much faster than Services (5.5%)

“The rising costs of goods (9.5%), rather than services (5.5%), is driving overall inflation meaning that supply shocks from Covid-19 continue to impact the economy more than wage rises which have so far failed to substantially materialise.

“Previously we’ve seen softer retail trade numbers and rising unemployment, meaning the economy is weakening. Higher interest rates will only put more pressure on the economy.

“Overall, this is not the respite Australians we’re hoping to the surging cost of living.

“When considering interest rates the RBA needs to look at the impact of future rate rises on the whole economy, rather than a simplistic focus on headline inflation alone.”