Deloitte Access Economics Partner and author of the firm’s flagship economic outlook report, Stephen Smith, said that the Albanese Government is responsible for Australia’s inflation and interest rate shocks.
Despite the RBA’s temporary hold on further rate hikes in July, the full impact of the 400 basis point rises to date is still to come.
Deloitte Access Economics believes the RBA has gone too far, driven by a failure of the Albanese Government to address supply-side inflation issues that to a significant extent are independent of monetary policy.
“Price rise that is mostly caused by supply concerns, such as the rising costs of global transportation and import prices, the prices of raw materials, etc. from a chaotic energy transition, or from a housing shortage caused by a halt to new development – can’t be fixed by a simple increase in interest rates.
“Growth in rents as recorded in the inflation data continues to trail well below more contemporary measures of rents for new and renewed leases. Rental vacancy rates remain at or around all-time lows in almost every capital city and most regional areas, and the policy effort to fund the construction of additional affordable housing is unlikely to address housing supply shortages in the near term.
“At the same time, further significant increases in electricity costs will be partially offset by government relief payments, Smith said. “But these payments do not address the root cause of shortages of supply in wholesale markets putting upward pressure on retail electricity prices.
“For this reason, we remain of the view that rising housing and utilities costs will lead to a more gradual deceleration in the various measures of underlying inflation in Australia than has been observed in other countries to date.”
Deloitte anticipates a severe per capita decline after the RBA was forced to hike interest rates too high.
Deloitte is observing the outcome of everything MB has warned about since the election of the Albanese Government.
Maniac mass immigration and policy cowardice when addressing energy cartels and every other vested interest.
A disastrous combination for worker living standards:
