In an economy blighted by inflation, Australians like Dimuthu are collateral damage
Perth mother Dimuthu Peterson is feeling hopeless and considering working seven days a week to get by in an economy dogged by inflation.
“It’s our worst nightmare, honestly,” she said, packing her belongings in her current rental in the Perth suburb of Willetton.
“I’m scared for the future, and financial security is a big stress for us.”
Ms Peterson and her family expected to be living in their newly built home by now, but construction has been slow and expensive amid materials and labour shortages.
Instead, the family is now having to move to a new rental home, costing $140 more a week.
At the same time, interest rates are rising, and Ms Peterson said her builder has given no indication on when construction will finish.
“It’s scary. I feel we are trapped,” she said.
“If we had known we’d be in this situation we’d never have built.”
Hers is among countless Australian households battling to pay the bills.
More shocks to come
Consumer prices jumped 1.8 per cent in the three months to September 30, with new housing and gas prices rising the most.
The latest ABS data shows prices are up 7.3 per cent nationally over the past year, the steepest annual rise since 1990.
Food prices increased 3.2 per cent for the September quarter.
Perth pensioner Chris said his household budget could not absorb more price increases.
“I think it’s dreadful,” he said outside a grocery store in Willetton
“It puts the fear of Moses into us, 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 chain, Gilbert’s Fresh Market.
He said the floods in eastern Australia were influencing food costs for West Australian consumers.
“In a big way – a lot of the stuff over there they weren’t able to pick or harvest, so a lot of our stuff has gone over that way.”
Impact Economics and Policy economist Angela Jackson said the effects of the ongoing floods would accelerate inflation in the December quarter.
“We’ve had a number of shocks this year in terms of the war in Ukraine, but floods and natural disasters are just adding to these price pressures across the economy, and just making the economy task for the Reserve Bank and government even more difficult,” she said.
The inflation dragon
A day after delivering his first budget with little in the way of cost-of-living relief, Treasurer Jim Chalmers told the National Press Club inflation was the “dragon we need to slay”.
But that won’t be easy, quick or painless, with treasury tipping rising living costs to outstrip wages growth for another 18 months.
Australia’s biggest weapon is the monetary policy wielded by the Reserve Bank of Australia.
Next week, the bank’s board will meet to decide whether to increase interest rates again.
“I’d expect them to move another quarter of a percentage point next week, but probably then move [by half a per cent] again in December,” Ms Jackson said.
“This inflation figure confirms their worst fears, so they’re likely to take that final opportunity before Christmas to move again.”
Further interest rate rises have real consequences for households like Ms Peterson’s.
“How are we going to do it?” she asked.
“All the other expenses are going up, and salaries aren’t going up.”
Treasury is tipping annual inflation will be running at 7.75 per cent by the end of the year, fuelled by rising grocery and energy prices.
Time for higher wages?
Wages growth is a contentious topic, with unions arguing they must keep up with inflation, and the business community and many economists warning inflation will get worse if wages lift too high.
Ms Jackson said the latest inflation data showed it was largely confined to goods, which she considers good news.
“It continues to be driven by goods inflation, so it hasn’t really creeped into the services sector, which would mean it’s more entrenched, and that’s because wages haven’t taken off,” she said.
“If we did see wages pick up significantly these inflation pressures would be around for longer and the Reserve Bank would have to move more aggressively on interest rates.”
The Albanese government introduced its industrial relations bill, containing reforms aimed at narrowing the gender pay gap and lifting wages, into parliament on Thursday.
