“We’re providing payments to pensioners and others on fixed income, and we halved the petrol excise to deal with the spike that was there,” he said on Sky News on Friday.
Albanese said Australians needed more than just one-off payments to cope with cost-of-living pressures.
“What we actually need is strategies and plans to make sure that no one is left behind,” he said in Sydney on Friday. “No one left behind, and no one held back. That is Labor’s approach. That is where we will go.”
This week, the Reserve Bank lifted official interest rates for the first time in 11 years from the record low of 0.1 per cent to 0.35 per cent, with more significant increases flagged for the second half of the year and into 2023, in a bid to counter rising inflation.
In its meetings with businesses – the RBA’s business liaison program – the bank was told more than half of companies expected to lift wages by more than 3 per cent in the next year.
Businesses were also passing on cost increases due to persistent supply chain pressures and sustained demand, the RBA said.
Andrew McKellar, chief executive Australian Chamber of Commerce and Industry, said it was critical to take a “more cautious approach” to wage growth.
“The Reserve Bank’s statement raises concerns that inflation could rise even further over the forecast period if excessive wage increases are sought without achieving productivity gains,” he said.
“Narrowing margins means businesses are already being forced to pass on higher costs to consumers. Aggressive wages growth will only spur further inflation growth.”
And the sources of inflation are broadening. Prices for 70 per cent of products tracked in the consumer price index outpace the 2.5 per cent annual rate of inflation, which the RBA said “is comparable to the levels seen during the period of elevated inflation in Australia prior to the global financial crisis”.
Clothing prices fell in the March quarter thanks to heavy discounting by businesses keen to move excess summer clothing stock, but the RBA said its business insiders suggested some companies had lifted prices for winter goods.
The RBA also forecasts underlying inflation to peak in December at 4.6 per cent, before dropping to the top of the RBA’s 2-3 per cent target by the middle of next year.
The unemployment rate is expected to continue falling, and reach 3.6 per cent by June next year, while wages are forecast to reach 3 per cent by December and 3.7 per cent by June 2024.
GDP growth is predicted to rise to 4.2 per cent in December, before easing to 2 per cent by the end of 2023.
Commonwealth Bank’s head of Australian economics, Gareth Aird, said the RBA’s 2023 forecasts “should be taken with a pinch of salt”.
“We say that not so much because the RBA’s forecasting record more recently has not been particularly good. But rather because the economic outcomes we get in 2023 will be heavily dependent on what type of tightening cycle the RBA delivers,” he said.
CBA economists believe a shallow tightening cycle – raising rates to a high of 1.6 per cent by February next year and leaving them on hold – would maintain a strong economy into next year.
“It is our expectation that a tightening cycle in line with our call would generate both the desired cooling in inflation whilst keeping the unemployment rate low and economic growth solid,” Aird said.
“But a more aggressive tightening cycle in our view would generate an increase in the unemployment rate and weaker economic growth.”
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