"Today's National Accounts release from the ABS points to a clear slowing of the economy as 2022 drew to a close. Growth was lower; domestic price pressures, though still too high, had eased from earlier levels; households decreased saving; and investment was lower as were imports. Compensation of employees (a much broader measure than wage rates) rose strongly over the year with the pace of growth easing in the December quarter. This supported a further increase in household consumption," Innes Willox, Chief Executive of the national employer association Ai Group said today.
"As we enter the final month of the March quarter, the jury is still out on how far monetary and fiscal policy will need to further dampen the economy to bring inflation back under control. There is a clear risk that policy tightening will go too far. One sign of this risk is that were it not for the fall in imports, GDP would have shrunk in the December quarter.
"It is critical over the period ahead that governments, businesses and employees all exercise moderation in price setting and wage claims. The risk of a price-wage spiral emerging is real. The consequences of such a spiral are more interest rate rises and the unemployment and household distress this would cause," Mr Willox said.
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