RBA Governor Philip Lowe has warned Australians to strap in for higher than expected prices, as inflation is worse than feared.
“In both headline and underlying terms, inflation is much higher than we had expected. And it’s much higher than central banks around the world had expected,” he said in an address to the American Chamber of Commerce In Australia this morning.
“The fact that inflation is high everywhere, tells us that there are some powerful global forces at work.
“During the pandemic, supply chains were interrupted delivery times blew out and firm’s cost of production increased, not surprisingly, we’re seeing higher prices.”
This comes as a survey of industrial trends for the June quarter by the Australian Chamber of Commerce and Industry and Westpac highlighted labour and material shortages that will push up pricing across the board.
“Manufacturing is benefitting from the rebound in activity with the reopening of the Australian economy,” Westpac senior economist Andrew Hanlan said.
“Consumers are spending more freely with fewer COVID-related restrictions.
“Disappointingly, upside on growth is being capped by significant and persistent headwinds, notably labour and material shortages.
“Manufacturers’ profit margins are being squeezed as escalating costs outpace higher prices. Cost pressures intensified further in June, as gas and energy prices surged.
“The clear message from this survey is that consumers should brace for further sharp price increases.”
