THE SQUIZ

If you’ve bought anything in the last few months, you don’t need us to tell you this – but prices rose by 2.1% in the first 3 months of the year, taking the annual inflation rate to 5.1%. It’s the highest level since the introduction of the GST in 2000, and well above expectations. It’s also more evidence of the rising cost of living pressures Aussies are experiencing – one of the key issues of the election.

WHAT’S DRIVING INFLATION SO HIGH?

The Bureau of Statistics said the biggest contributor to the rising cost of living is soaring petrol prices, which have risen 11% in a year, fuelled by the war in Ukraine. You’ll remember at the end of March, the Morrison Government has introduced – supported by Labor – a cut in the fuel excise rate to knock 22 cents/litre off the price. Also up are university fees (6.3%), as are new homes (5.7%). Groceries are 4% more expensive due to higher costs of transport, COVID supply chain issues and the floods in eastern Oz. Treasurer Josh Frydenberg said the stats don’t pick up the halving of the fuel excise, which Treasury anticipates will knock 0.25 percentage points off the inflation rate.

WHAT HAPPENS NEXT?

Reserve Bank Governor Philip Lowe will mull it over ahead of the board meeting next Tuesday when it looks at the official interest rate. There has been the expectation that rates will go up in June, but this higher-than-expected result makes a May move a possibility. If that were to occur, it would happen during week 4 of the election campaign, which is not on Team Morrison’s campaign wish list and it comes with bad juju… The last time interest rates went up during a campaign was in 2007 when the Coalition led by John Howard lost. Labor’s Treasury spokesman Jim Chalmers says Morrison and Frydenberg are “out of plans and out of time” as he laid out their plan to manage the economy yesterday. But Frydenberg called on voters to trust in the Coalition’s economic management. “This is not a time to put at risk the gains we have made. This is a time for strength and stability,” he said yesterday.