Inflation Rise A Potential Hammer Blow For Retailers
As CE And appliance retailers face falling sales, inflation has accelerated for the first time in four months, with the real possibility that the RBA could return to dishing out rate rises, which would be a “hammer blow” for retailers claim observers.
The major contributor to the increase in inflation to 5.2% in August was to higher fuel costs and landlords putting up rents.
New governor Michele Bullock has said the central bank might need to raise interest rates again.
In the past the RBA has ignored petrol prices in the short term and focuses on underlying inflation issues however this could change as the big oil Companies look to generate revenue as consumers flock to electric cars.
The AFR claims that the jump in the monthly consumer price indicator from 4.9 per cent in July coincides with global government bond yields hovering around 15-year highs, as investors fret about sticky inflation and bet that borrowing costs will stay higher for longer.
Inflation has moderated from a peak of 8.4 per cent in December, but an acceleration last month suggests a hoped return to the Reserve Bank of Australia’s target of 2 per cent to 3 per cent, by late 2025 as it forecasts, could be volatile and not a straight line.
The RBA is likely to wait for the September quarter consumer price index due in late October before deciding whether to raise the current 4.1 per cent cash rate.
Surging during the past month petrol prices have climbed close to 10% and was a significant contributor to the rise in inflation.
While fruit and vegetable prices fell 8.3 per cent rents rose 7.8 per cent annually, up from 7.6 per cent in July.
The pace of electricity price increases moderated somewhat but were still 12.7 per cent higher.
Holiday travel and accommodation prices increased 6.6 per cent in the twelve months to August 31, up from 5.3 per cent in July.
Insurance and financial services costs continued to climb, up 8.8 per cent, from 8.5 per cent previously.
The rebound in inflation follows a moderation in price pressures in July, when the monthly inflation indicator eased to 4.9 per cent.