Hopes of an interest rate cut this year have been dashed after worse than expected inflation figures. It puts more pressure on the Federal Treasurer and his upcoming budget as more households struggle to balance their own.

Council of the City of Sydney

Recent inflation figures have exceeded expectations, diminishing the likelihood of an interest rate cut anytime soon. Current statistics point towards an inflation acceleration in the March quarter, reaching 1%, which pushes the annual inflation rate to 3.6%. The report highlights significant contributors to this inflation surge, including rising costs in healthcare, education, and notably, rent, which has seen its fastest annual increase in fifteen years. Additionally, insurance premiums have experienced their most substantial rise in 23 years.

With the cost of living continuing to climb – reflected in increased prices for groceries, utilities, and housing – the financial pressure on households is intensifying. This scenario has prompted widespread concern and discussions regarding the necessity of further interest rate hikes to mitigate inflation. Despite the rapid pace of recent rate increases, the latest inflation data suggests that additional hikes cannot be entirely discounted. 

The potential for further rate adjustments is a crucial topic for the Federal Treasurer, who is in the process of finalizing the upcoming budget. The Treasurer's goal is to address inflation and alleviate the cost of living, indicating that the recent inflation metrics will play a significant role in shaping budgetary decisions. In light of these challenges, some economists remain optimistic, suggesting that $20 billion in tax cuts scheduled for mid-year could offer significant relief, equating the impact of one or two rate cuts.



RBA refuses to rule out interest rate hikes

Probably in the last few years, groceries have doubled, easy. Still feels like we're being ripped off. It's terrible. I can't believe how things have gone up. Despite the fastest rate hiking cycle in history, aimed at slowing spending, prices keep marching higher. Inflation accelerated more than expected in the March quarter to 1%. That took the annual figure to 3.6%. It was driven by fee hikes to health care and education, as well as rents, which grew at their fastest annual pace in 15 years, but would have been higher if rent assistance hadn't been increased. Insurance premiums also jumped by their most in 23 years. I'm working two jobs that pay 30 plus an hour, so you'd think you'd be able to make enough off of that. Bills for electricity, gas and water are going through the roof as well. Interest rates are also a huge problem for us at the moment with our mortgage. Today's inflation number means another rate hike can't be ruled out. This inflation data will certainly renew some of that debate around whether we actually need to see higher interest rates. We don't think that we will see a further rate hike from here, I just don't think it's necessary, but the quarterly inflation data definitely means that that risk of a near term rate cut has absolutely disappeared. The Treasurer hopes to ease the cost of living burden in May. All of these new numbers that we receive today will help us as we finalise the budget to hand down next month. As I said, our primary focus is on inflation and the cost of living. The inflation numbers are a sobering reminder. The battle is far from won and some forecasters are now pushing out their predictions of a rate cut to November or December this year. But relief is inside. Some economists say the $20 billion worth of tax cuts taking effect from mid-year are as good as one or two rate cuts.

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Camperdown

Labor wipes of $3 billion in student loans

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Baja California

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Willetton

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State of Rio Grande do Sul

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Tel Aviv-Yafo

Israel-Gaza War

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London

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Canberra

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Ensenada

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Kyiv

Ukraine Invasion

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Surrey

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Wenchang

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Ankara

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Paris

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Arizona

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Washington

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New York

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Zaporizhzhia

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Grave fears for brothers missing on Mexico surf trip

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Bogotá

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Tbilisi

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