Research conducted by the Australia Institute reveals Australians understand that the current rise in inflation has not been driven by wages growth, contrary to the single-minded focus of the Reserve Bank on labour costs over the past two years.
The Australia Institute surveyed Australians about their views on the causes of, and solutions to, inflation, with respondents identifying corporate profits as a major factor, while also backing a broader response from governments.
• Corporate profits blamed: Just over a third of Australians (34%) believe the biggest cause of inflation was companies increasing their prices by more than their costs, more than any other cause.
• Wages not the culprit: Only 5% of respondents believe that rising wages are the biggest reason for inflation. This is consistent with the reality that Australian wages have fallen well behind prices since the start of post-pandemic inflation, falling 6% in real terms in the last two years.
• Backing a broader response: One in three Australians (33%) think that putting price caps on essential goods and services would be the most effective way to combat inflation in Australia. Just under one third (28%) chose taxing back excess profits of corporations and using the proceeds to reduce prices as the best response.
“Australians are far more aware than the Reserve Bank that inflation has been caused by companies increasing prices by more than their costs,” said Greg Jericho, Chief Economist at the Australia Institute’s Centre for Future Work.
“These survey results provide a timely notice to the government and newly appointed Governor of the Reserve Bank, Michele Bullock, that most Australians believe there are better ways to tackle inflation than just dramatically lifting interest rates.
“Australians understand and support other measures to control inflation, including instituting price caps on essential goods and services and taxing excess profits, rather than further hikes to interest rates.
“Further interest rate rises would only further hurt households with little impact on inflation, especially at a time when increases to rents and energy prices are set to continue.”