Federal treasurer Jim Chalmers has given insight into how Australia’s soaring rate of inflation will pan out as millions continue to grapple with cost of living pressures.
Mr Chalmers made the prediction while delivering a video message to the institute of Superannuation Trustees’ Conference of Major Superannuation Funds (CMSF) in Melbourne on Tuesday.
He said while the rate of inflation is believed to have peaked around Christmas 2022, Australians will continue to feel the pinch with living expenses.
“As well as being optimistic. I’m also realistic about some of the difficulties that we’ll need to navigate together over the course of the next year or two,” he said.
“Interest rate rises are really tightening the screws on a lot of families and small businesses right around the country. Combine that with a fair bit of global uncertainty that we’re seeing right now, whether it’s in the financial system, or in the major economies around the world.”
Mr Chalmers went on to say the government is predicting all current factors will result in a slowdown for Australia’s economy as a whole.
“You can see why treasury, the Reserve Bank and others, including a number of you in the room there, are expecting our economy to slow considerably through the course of the next little while,” he said.
“So we’ve got a lot coming at us, from around the world, but we’ve got a lot going for us as well.”
Mr Chalmers said earlier this month that inflation remains unacceptably high and too persistent but he was optimistic it’s slowing down after the Reserve Bank hiked interest rates for a tenth consecutive time.
He named cost of living as the number one fiscal challenge currently facing Australia, a third of the way into what he describes as a “defining decade” ripe with opportunity to modernise the economy through the climate and energy transition.
The central bank’s board lifted the cash rate, which guides interest rates set by lenders, by 25 basis points to 3.6 per cent earlier this month, reaching its highest level since June 2012.
RBA governor Philip Lowe said inflation could be brought back within the target range of 2 to 3 per cent by mid-2025 and tempered predictions there would be multiple rate rises to come, in a move away from his previous analysis of pending rate hikes.