“The IMF’s outlook for Australian inflation is a sobering reminder that Australia’s inflation fight is far from over and reinforces the need for governments to rein in their spending which is prolonging the pain,” Ai Group Chief Executive Innes Willox said.
“Undoubtedly the worst of the inflation spike is behind us, but the IMF forecast makes it clear that much of its long tail is home grown.
“The forecast reinforces two things – that Australians should not expect any short-term relief from the cost of living burden and they will be suffering higher inflation and paying higher interest rates for longer than many of our competitors.
“The Reserve Bank’s approach has meant we have seen lower interest rates than many other developed economies but the flip side is that our relatively elevated rates will be with us for longer.
“Data around employment and unemployment will be key watch points in the months ahead. It is unfortunately likely that unemployment will have to edge up further before we see interest rate relief. That the Government funded public sector is adding jobs at a furious pace is undoubtedly complicating the inflation fight.
“Governments, both state and federal, need to take their eye off the political prize and think about the future of everyday Australians – because they live beyond the next electoral cycle.
“Geopolitical risks are also impacting the inflation fight. Members are reporting significant increases in shipping and container costs as the global economy prepares ongoing disruption.
“The obvious thing to tackle is our lackluster productivity growth which is as flat as a pancake - stop talking about it and start doing something about it,” Mr Willox said.
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