THE SQUIZ
Because we could all do with a bit of pressure down… Chatter about building cost of living pressures has made a post-election campaign comeback with the Reserve Bank raising its official interest rate by 0.5% – the most in 22 years – to 0.85%. And the nation’s energy ministers are holding emergency talks today about the electricity/gas price and supply crunch. At the centre of it all is the fraught task of managing inflation – and Treasurer Jim Chalmers says things are set to “get harder before it gets easier”.

WHY IS IT SO HARD?
It’s because we’re living through interesting times… COVID was the biggest economic shock here and abroad since the Great Depression. Things are getting back on track, but there are still supply chain issues, illness and restrictions casting a giant shadow over progress – and then there’s the thumping hangover of government debt. Russia’s invasion of Ukraine made a difficult situation even more tricky, making food and energy prices rise above already high COVID-affected levels. Add floods on Australia’s east coast and a significant cold snap to the mix, and you’ve got one ugly inflationary cocktail.

HOW MUCH IS IT GOING TO HURT?
It depends on how exposed you are. If you’re paying a lot of your salary on a mortgage, need to drive a lot, like to keep the lights on along with your gas/electric heater, and enjoy fresh food, it’s gonna sting… Reserve Bank Governor Philip Lowe says inflation is expected to increase further but would then head back towards the target range of 2-3% by next year. Treasurer Chalmers says the new government can’t fix all the problems that have been “brewing for 9 years” in its first fortnight in office, but he will outline the full plan in a new Budget in October. It will include cost of living relief, and he says there’s spending aimed at growing the economy without adding to inflationary pressures while getting long-term energy prices down and real wages up. Coalition Treasury spokesman Angus Taylor says Labor is set to unleash “unnecessary spending which increases interest rates, fuels inflation and makes life harder for Australians.”