Australia’s 20-year high inflation will peak at 7.75 per cent, according to the government, setting the scene for the RBA to upgrade its forecasts next week.
will peak at 7.75 per cent, Treasurer Jim Chalmers said on Thursday, as rising energy prices bite further into household budgets, setting the scene for the Reserve Bank to upgrade its economic forecasts next week.
governor Philip Lowe acknowledged the RBA expected inflation to peak at about 7 per cent by Christmas.The government also cut its economic growth projections by half a percentage point for this financial to 3 per cent by mid-2023 and to 2 per cent by June 2024. The jobless rate is expected to edge higher from the current 48-year low of 3.5 per cent to 3.75 per cent by mid-2023, and to hit 4 per cent by June 2024.
CBA expects CPI to peak at 6.75 per cent, NAB at about 7 per cent, Westpac at 7.2 per cent and ANZ sees CPI rising to 7.7 per cent. AMP forecasts inflation to top 7.2 per cent and Jarden Group says 7.7 per cent.Financial markets are also sceptical about the government’s forecasts. One-year inflation swap, a market gauge of CPI expectations, was trading at 6.14 per cent, while two-year inflation swap stood at 3.56 per cent, both measures well under Treasury’s dire predictions.
“When you look at what has pushed inflation up, a lot of those factors now seem to be reversing: global food, oil and gas prices are now well below peaks earlier this year.”, and cheaper import prices, particularly from China, Australia’s largest trading partner.
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