Economy

RBA tipped for ‘super-sized’ rate rise amid cost of living crisis

Homeowners are bracing for a fresh cost of living hit amid expectations the official cash rate will jump above 2 per cent for the first time in six years.
The Greens are calling for a pause in interest rate rises, as the cost of living crisis drives some families to charities in search of food and hits everyone at the supermarket checkout.

“Usually that would cost me what I just got, two bags, maybe like $60,” Sydney shopper Tayla Parian told 9News today.

Tayla Parian believes the cost of her regular shop has almost doubled. (9News)

“It cost me close to $120 this time.”

The Reverend Bill Crews Foundation in NSW is providing more than 10,000 meals a week, along with hundreds of food parcels, as some are driven into poverty.

“I’d like to see the government making sure that people do not go hungry, which they are,” Crews told 9News.

The Reserve Bank lifted the official cash rate from its historic low of 0.1 per cent in May, following suit in June, July and August. 

The cash rate has risen consistently since may. (9News)

The rate now stands at 1.85 per cent and it’s tipped to rise above 2 per cent when the board meets on Tuesday, but the Greens don’t want it to go any higher for now.

“The RBA should press pause on interest rates at least until the October budget and put pressure on the Government to provide significant, genuine immediate cost of living relief,” Senator Nick McKim argued.

Greens Senator Nick McKim wants a pause on cash rate increases. (9News)

Regardless, economist Chris Richardson predicted a “super-sized” cash rate increase of as much as half a percentage point, saying it was the organisation’s only weapon to fight inflation.

“The Reserve Bank is only going to stop when it hurts,” he told 9News. “Hurts enough that we spend less than we are spending at the moment and allowing inflation to come down from where it is.”

Economist Chris Richardson expects a big lift to the cash rate when the Reserve Bank of Australia meets on Tuesday. (9News)

Drivers are bracing for pain at the supermarket checkout to soon be mirrored at service station bowsers.

As global oil prices soared on the back of Russia’s unprovoked invasion of Ukraine, the Morrison government cut the fuel tax levy in half in May, slicing 22¢ off the cost of a litre of petrol.

Unless the Albanese government extends it, that tax holiday ends on September 28, prompting a jump of 25¢ once GST is included. 

“I’ve got a kid to feed as well,” driver Dion Karafyllas told 9News.

Parliament returns this week and the opposition will be attacking cost of living pressures and Labor’s embrace of union’s being allowed to strike wage deals with multiple employers.

“That will take this country back to the dark ages of the ’70s and ’80s,” opposition workplace relations spokeswoman Michaelia Cash said.

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But Minister for Skills and Training Brendan O’Connor defended increased wage bargaining power, saying real wages had gone backwards by 3.5 per cent as a result of inflation.

“The breathless hysteria about massive disputation happening because we use a new vehicle to bargain is not borne by the facts,” he told the ABC’s Insiders today.

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