Presented by Jones Partners
Inflation: 7.8 per cent
Inflation remains troublingly high. This can be attributed to excess demand and soaring energy, oil and gas prices, a direct result of supply chain issues and sanctions originating from the Russian Federation war against Ukraine. Experts predict inflation will continue to rise, requiring a continued hike in interest rates before it is combatted. This will be the leading contributor to business failure, particularly in the construction industry.
Cash Rate Target: 3.35%
The recent spikes in cash rates have been implemented by the Reserve Bank of Australia to combat consumer spending. These steady, continuous increases first beginning in May 2022, have attempted to rein in inflation, but indicators show these increases have had little effect. Experts remain divided over whether an aggressive approach to wrangling inflation (as taken by the USA’s FRB) is best, whilst others claim these continued hikes will ultimately cause more detriment to ordinary Australian’s through rising cost of living pressures and other challenges such as slow wage growth and the rental crisis.
Economic Growth: 5.9%
Economic growth (as shown through GDP) is currently at 5.9%. Australia’s economic growth has significantly increased from past months, likely due to the easing impacts of the coronavirus pandemic and reduced supply chain issues. During the pandemic, Australian’s couldn’t spend money overseas, allowing it to be reinjected back into Australia’s economy.
Wage Growth: 3.1 per cent
Wage growth remained relatively slow in the final quarter of 2022. Whilst this slight downturn is a positive indicator in the battle to reduce inflation, it does little to address the cost-of-living crisis which is the harsh reality for millions of Australians.
Unemployment Rate: 3.5 per cent
The unemployment rate in Australia remains at a record low. This can be explained by a period of heavy fiscal stimulus, closed international borders and loose monetary policy. Whilst a low unemployment rate is normally good, it also indicates the significant labour shortage occurring within Australia, with industries such as agriculture, hospitality and construction suffering the most.