Soaring energy, rent and food prices have been weighing heavily on hip pockets but consumer price pressures are expected to wane.
Speaking to a parliamentary committee on cost of living pressures, Reserve Bank of Australia head of economic analysis Marion Kohler said inflation likely peaked at the end of last year and would start easing over the course of 2023.
The RBA has been hiking interest rates since May 2022 in response to soaring inflation, which hit an annual rate of 7.8 per cent in the December quarter.
For mortgage holders, there’s likely more pain to come.
Dr Kohler acknowledged the stress on home borrowers but said high interest rates were necessary to ensure high inflation doesn’t linger.
The central bank estimates more than 800,000 households will fall off fixed rates onto more expensive variable rates, amounting to around $350 billion in expiring credit.
In the supermarket, shoppers are yet to change their behaviour in response to cost of living pressures.
Woolworths Group chief commercial officer Paul Harker said the supermarket brand had not noticed a discernible shift in shopping habits but customer surveys suggested households would likely start tightening their belts.
“Customers were expressing intentions around needing to adjust their purchasing patterns, behaviours, and the like,” he told the committee on Wednesday.
The Senate committee also heard from groups representing welfare recipients.
Australian Council of Social Service chief Cassandra Goldie said low-income Australians were in crisis long before inflation started surging.
She said people on income support payments were routinely going without essentials, and the council is urging the government to lift JobSeeker and other support payments to support the most vulnerable.
Energy Consumers Australia policy director Jacqueline Crawshaw confirmed the energy bill pressures households and businesses were experiencing.
She said surveys of energy users found most people did not expect the clean energy transition to lead to higher energy prices.
“They actually see addressing climate change as something that they expect to happen, that they want to happen, they also expect the lights to stay on but they also expect it to be affordable,” Ms Crawshaw said.
“They don’t expect to have to trade off on those things.”
Liberal senator and committee chair Jane Hume said the cost of living was the top issue for Australians.
“Prior to the election, Labor said they had the answers. It seems to be getting worse, it’s the worst inflation figure we have seen since 1990,” she told Seven’s Sunrise program.
“At the beginning of the year, with people going back to work and school, Australians are feeling the pinch of the grocery take-out, petrol bowsers, paying their bills and mortgages.”
But Senator Hume denied that the committee would be used as a witch-hunt against the government.
“We will consult with industry, individuals, groups and find practical, implementable solutions to the cost-of-living crisis.”
© AAP 2023
