Why the RBA Is Wrong on Inflation

If you drink alcohol, smoke tobacco, drive a car, or plan to visit a doctor this year, the Australian Bureau of Statistics has some bad news for you.

Prices on all of these goods and services are rising…fast.

While the RBA rather perversely maintains that an inflation rate of 2-3% is desirable, most Australians likely have a different opinion on rising costs.

Household budgets are stretched

Indeed, household budgets are being stretched with the latest cost-of-living index rising at its fastest annual growth rate in four years.

The living-cost index for the June quarter, published by the Australian Bureau of Statistics, rose by 0.4%.

The cost of living for aged pensioners and benefit recipients lifted 2.5% over the past 12 months, with employee households’ costs up 2.3% and self-funded retiree households hit by a 2% rise.

The index answers the question: ‘By how much would after tax money incomes need to change to allow households to purchase the same quantity of consumer goods and services that they purchased in the base period?

CommSec senior economist Ryan Felsman said petrol prices, medical and hospital services and alcohol and tobacco price rises are stretching budgets.

At the same time, wage growth sits at 2.1%.

ACTU secretary Sally McManus said it showed Australians needed a pay rise.

Working people need the tools and power to win fair pay rises,’ she said.

This includes the ability to band together in groups larger than small workplaces. The enterprise-only bargaining system is failing.’

The Australian Tribune with AAP

PS: The tax burden on Australians has grown by leaps and bounds in our lifetime, and shows little sign of reversing. But if you think you know who’s responsible, you may be surprised by the information in our new free report, ‘What you could do to stop Australia’s Tax Freedom Day from blowing out even further in 2018’. Click here for more. 

The Australian Tribune with AAP

The Australian Tribune with AAP

Comments: 2

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  1. In my day if you wanted a pay rise you had to EARN it….the idea of a pay rise purely to remedy the economy is fantasy at it’s best and good reason why Unions need to pull their heads in from time to time and live in the real world. There are two ways to get by one to earn more and the other to learn to economise something Australians are not too good at. Having the 2 story house and 2 BMW’s is something to aspire to but it isn’t a right !!!! Keeping up with the Jones’ is a mentality Australians can do without.

    1. I agree Alan, there are too many people wanting something for nothing. We really have things pretty good, just put some effort into your job and learn to live within your means. None of this is difficult and life in Australia can be very comfortable.