Inflation Likely Peaked At End 2022 At Around 8%

RBA’s Kohler, Head of Economic Analysis, appeared before the Senate Select Committee on the Cost of Living. It is worth noting that she was limited in her answers given that the RBA is currently reviewing its forecasts which will be published on February 10 in the Statement on Monetary Policy. She said that the central bank thinks that inflation peaked at the end of last year at around 8%.

• Kohler reiterated that “inflation is too high” and price pressures have broadened to domestic areas. She also noted that Australia is lagging other countries due to the later reopening and had some Australia-specific problems, such as floods and domestic energy markets. Kohler commented that higher rates were necessary to bring supply and demand into balance and inflation down.
• She noted that the labour market remains very tight and are putting upward pressure on wages but that real wages have been falling. More employment income has helped through more jobs and increased hours and higher rates have increased the incomes of self-funded retirees.
• Kohler’s opening remarks can be read here.
• Woolworths spoke after Kohlerand the supermarket chain believes that the worst of inflation is over as key global food and shipping costs have eased. But suppliers continue to say that costs and staff shortages are a constraint.