Treasurer Jim Chalmers has warned that families will find themselves in a difficult economic time in the coming months, ahead of an expected rise in inflation.
Inflation levels will rise when the latest consumer price index figures are released later this month.
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Chalmers said that while inflation would flatten next year, there will be pain in the pocket for Australians in the near future.
“Unfortunately, we expect this inflation challenge to get worse before it gets better, but it will get better,” Chalmers told Sky News on Sunday.
“We expect inflation to moderate next year, but we are in a difficult time for many families.”
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Inflation currently stands at 5.1%, the highest level in two decades.
Chalmers said rising inflation would also likely have an effect on the official interest rate.
The Reserve Bank of Australia will meet on August 2 and a further rate hike is expected.
It comes after the cash rate has risen in each of the last three months, with the rate now standing at 1.35 per cent.
“Clearly, the inflation of the rate we are seeing now will lead to increases in the interest rates of the independent Reserve Bank,” Chalmers said.
“This will clearly slow down the economy or slow down our expectations of short-term economic growth, as interest rates rise in the way the Reserve Bank governor has indicated they will.
“This will make life even more difficult for many Australians who are already facing rising cost of living.”
Treasurer Jim Chalmers has warned that families will find themselves in a difficult economic time in the coming months, ahead of an expected rise in inflation. Credit: AAP
Chalmers has been with Reserve Bank Governor Philip Lowe at the G20 finance ministers’ summit in Bali.
The treasurer told the forum that collective action was also needed to deal with the global economic pressures that had been caused by Russia’s invasion of Ukraine.
After falling unemployment figures to near-50-year lows, Chalmers said it was critical that more people access opportunities in labor markets.
The latest figures saw the national unemployment rate fall from 3.9% to 3.5%, the lowest levels since August 1974.
“This unemployment rate was an incredibly strong result and very welcome,” Chalmers said.
“It reinforces the need at our work summit to bring people together around some of the challenges associated with labor shortages and skills shortages.”
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