Perth mother Dimuthu Peterson is feeling desperate and plans to work seven days a week to get by in an inflation-ridden economy.
“It’s our worst nightmare, honestly,” she said as she packed up her things at her current rental in the Perth suburb of Willetton.
“I fear for the future and financial security is a big stress for us.”
Ms Peterson and her family expected to live in their newly built home now, but construction was slow and expensive due to shortages of materials and labour.
Instead, the family now has to move into a new rental home, which costs an extra $140 a week.
At the same time, interest rates are rising and Ms Peterson said her builder had given no indication of when construction would end.
“It’s scary. I feel like we’re trapped,” she said.
“If we had known we would be in this situation, we would never have built.”
His is one of countless Australian households struggling to pay the bills.
More shocks to come
Consumer prices jumped 1.8% in the three months to September 30, with prices for new homes and gasoline rising the most.
The latest data from the ABS shows prices rose 7.3% nationwide over the past year, the biggest annual rise since 1990.
Food prices rose 3.2% in the September quarter.
Perth pensioner Chris said his family budget could not absorb any more price increases.
“I think it’s appalling,” he said outside a grocery store in Willetton
“That scares us Moses, and I don’t know how we’re going to balance our budgets in the future, if that’s the case.”
Charlie Opferkuch runs his family’s fruit and vegetable grocery store chain, Gilbert’s Fresh Market.
He said flooding in eastern Australia was influencing food costs for consumers in Western Australia.
“To a large extent – a lot of stuff there that they couldn’t pick or harvest, so a lot of our stuff went through there.”
Impact Economics and Policy economist Angela Jackson said the effects of the ongoing flooding will push up inflation in the December quarter.
“We have had a number of shocks this year in terms of the war in Ukraine, but floods and natural disasters only add to these price pressures across the economy and only make the economic task of the Reserve Bank and the government even more difficult,” she said.
The Inflation Dragon
A day after presenting his first budget with little cost-of-living relief, Treasurer Jim Chalmers told the National Press Club that inflation was the “dragon we must slay.”
But it won’t be easy, quick or painless, with the Treasury tipping the rise in the cost of living to outpace wage growth for another 18 months.
Australia’s greatest weapon is the monetary policy conducted by the Reserve Bank of Australia.
Next week, the bank’s board will meet to decide whether to raise interest rates again.
“I expect them to move another quarter of a percentage point next week, but probably then they move. [by half a per cent] again in December,” Ms. Jackson said.
“This inflation figure confirms their worst fears, so they will probably take this last opportunity before Christmas to move again.”
Further interest rate hikes have real consequences for households like Ms. Peterson’s.
” How are we going to do this ? ” she asked.
“All other expenses are going up and salaries are not going up.”
The Treasury expects annual inflation to reach 7.75% by the end of the year, fueled by rising food and energy prices.
Time to raise wages?
Wage growth is a controversial topic, with unions saying they need to keep up with inflation, and the business community and many economists warning that inflation will get worse if wages rise too much.
Ms Jackson said the latest inflation data showed it was largely confined to goods, which she sees as good news.
“It continues to be driven by goods inflation, so it hasn’t really seeped into the service sector, which would mean it’s more entrenched, and that’s because wages haven’t not take off,” she said.
“If we saw wages rising significantly, these inflationary pressures would last longer and the Reserve Bank would have to act more aggressively on interest rates.”
Albania’s government presented its industrial relations bill to parliament on Thursday, containing reforms aimed at closing the gender pay gap and raising wages.
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