Australians hoping to end rising prices have received a serious warning from the treasurer.
Treasurer Jim Chalmers expects inflation to be “significantly higher” than expected.
Global inflation for the year to March has soared to 5.1%, the highest since 2001.
Dr Chalmers said he would offer an update to parliament when it resumed next month, ahead of the October budget.
“Inflation will be significantly higher than expected in the last government’s most recent budget, which was also expected in election time,” he told ABC’s Insiders.
“Definitely higher than the 5.1 per cent we saw in the March quarter. This inflation issue will become more difficult.
“We will do the work from now until July to offer people the most accurate assessment of where we believe this inflation challenge is going.”
Both experts and the government warn that inflation will get worse before it gets better.
Reserve Bank Governor Philip Lowe predicted last week that inflation would reach a 32-year high of 7%.
It is not expected to decline towards the central bank’s target of two to three percent by 2023.
But his warning of a wage price spiral in the 1970s angered union leader Sally McManus, who claimed the RBA leader had lost touch with reality.
On Sunday, Dr. Chalmers backed Mr. Lowe, insisting that an upcoming review by the Reserve Bank was not to “get us out” of the governor.
However, he indicated that there could be a place for unions on the RBA board of directors from now on.
“It would not be unprecedented to have someone on this side of the conversation represented on the board,” the treasurer said.
The government plans to hold a labor summit, likely in September, to discuss wage agreements and productivity in an attempt to raise wages.
More immigration, skills policies and simplification of collective bargaining are expected to be key points of discussion.
When asked if Australians could expect real wage growth within this parliamentary term, Dr Chalmers said the government had already handed over to low-paid workers.
“What we said is that low-wage workers are our first priority. We met that,” he said.
However, when pressured, the treasurer said it was ultimately based on controlling the rate of inflation.
“It depends on the rate of inflation, wages and making sure we have a more productive workforce so that the solid and sustainable wage increases we expect do not add to inflationary pressures.”