Real wages slump, unemployment to rise as inflation’s headwinds buffet economy | swrighteconomy rachelclun
The economy will slow, more people will be out of work and real wages will take a substantial hit as the Reserve Bank’s efforts to control inflation with higher interest rates bite, Treasurer Jim Chalmers will reveal in a budget and economic outlook to be delivered to parliament.
But Chalmers will tell parliament that economic growth for this financial year and next will be half a percentage point lower than expected, at 3 per cent and 2 per cent respectively. Chalmers is expected to predict that inflation will peak above 7 per cent, much higher than the rate of increase in wages.
Chalmers’ address will follow the latest consumer price index report that showed prices climbed by 1.8 per cent through the June quarter. This took the annual rate of inflation to 6.1 per cent, its highest level since the introduction of the GST in 2000.
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