The RBA has a strict mandate to tackle inflation, which is why experts predict the cash rate target will rise to 4.35 per cent next week.
Aussie households are staring down another brutal cost-of-living blow after a $3000 hit, with crucial inflation data set to lock in more rate hike pain.
New ANZ-Roy Morgan figures released Tuesday show consumer confidence rose a modest 3.5 points last week to 67.8 – its highest level since mid-March – but still among the lowest readings since the series began in 1973.
The data comes ahead of what ANZ economist Sophia Angala predicts will be a 1.4 per cent quarterly rise in headline inflation for March, driven in part by fuel price spikes.
MORE: Offers plunge 50pc: First sign of property fall
$16bn tax bombshell: Aus banks go to war with global tech giants
ANZ economist, Sophia Angala, expects a rise in inflation as well as the cash rate target.
“We forecast headline inflation to have risen 1.4 per cent q/q, partly reflecting the impact of higher fuel prices in March,” she said.
“We continue to expect the RBA to increase the cash rate by 25bp at its May meeting.”
Financial markets are also bracing, with ASX showing a 74 per cent chance priced in for a hike to 4.35 per cent at next week’s RBA meeting.
Canstar data insights director Sally Tindall said many economists predict headline inflation will get precariously close to 5 per cent in March, just one month into the war in the Middle East.
“While the RBA is likely to put more weight on more recent indicators, the reality is the country could well be back to a cash rate of 4.35 per cent.”
Consumer finance expert Joel Gibson of shopping comparison firm Zyft said the inflation print was shaping as one of the most critical of the year, warning households were already under intense pressure.
“Since January 1, Aussie families have been hit by a relentless wave of price hikes that have wiped out any hope of a quiet year,” he said.
“There isn’t one thing driving this – it’s everything hitting at once.”
Zyft consumer finance expert Joel Gibson said the number that matters is “what’s left in your bank account after rent, groceries, fuel and bills”.
He said households have already been slugged with around $3000 in extra annual costs, including about $1800 from two recent rate rises, up to $800 from higher fuel costs, $220 from rising health insurance premiums and $50 to $60 increases to mobile plans.
“And that’s before you factor in grocery prices, which are set to jump again,” he warned.
Mr Gibson said the real pressure point wasn’t the inflation rate itself, but what households have left after essentials.
“The number that matters most isn’t the inflation rate – it’s what’s left in your bank account after rent, groceries, fuel and bills,” he said.
“With cost pressures showing no signs of easing, the RBA may have little choice but to keep rates higher for longer.”
Ms Tindall said fixed mortgage rates were already climbing ahead of the RBA decision, shrinking the window for borrowers to lock in certainty.
“The lowest fixed rate on the Canstar database is now 5.74 per cent for a one-year term – up 0.25 percentage points,” she said.
The choice between fixed and variable rates was now finely balanced with variable to win by $187 if there was one more rate hike, though fixing would triumph by $1058 if there were two more hikes to come.
“If the stress of the unknown is costing you sleep, or if your budget is stretched so thin that another hike would break it, fixing buys certainty and a financial ceiling,” she said.
Getting a better deal on essentials like the mortgage, energy and insurance could mean Aussies don’t have to cut back on simple pleasures like caffeine.
Mr Gibson urged Australians to focus on cutting unnecessary costs without sacrificing essentials.
“You can’t opt out of the basics, but you can stop overpaying for them,” he said.
“Check every price, switch providers where needed, and you could save hundreds without giving up anything.”
“Make this the year you check every price and don’t pay more than you have to,” he said.
“The recent ACCC trials involving Woolworths and Coles have pulled back the curtain on supermarket tactics, proving that consumers are no longer being tricked by flashy ‘special’ stickers or misleading deals. Aussies are tightening their belts and looking past the marketing to find the genuine best deal.”
He said spending five minutes to check if there are better alternatives for essential energy or insurance costs “could save hundreds of dollars without even having to give up the caffeine”.
“Fix the leaks in your non-discretionary spends – like your mortgage and your weekly grocery shop – by shopping around for a great deal, and you’ll find the breathing room you need.”
English (US) · 