Boomer retirees, not workers, are the surprise losers from Australia\u2019s renewed inflation problem that could delay or cancel interest rate cuts next year.<\/p>\n
Age pensioners suffered a whopping 3.9 per cent increase in living costs in the year to September 30, well above the 3.2 per cent inflation rate across the economy, Australian Bureau of Statistics figures said on Wednesday.<\/p>\n
Employees\u2019 living costs rose by 2.6 per cent, which was near the middle of the Reserve Bank of Australia\u2019s 2-to-3 per cent target. Self-funded retirees\u2019 living costs rose 2.8 per cent.<\/p>\n
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By continuing you agree to our Terms<\/a> and Privacy Policy<\/a>.<\/p>\n Grattan Institute economist Matthew Bowes said older Australians on fixed incomes were suffering the most from price rises.<\/p>\n \u201cThe basket of goods that you\u2019re looking at for those pensioners might include a higher weighting for things like higher healthcare costs,\u201d he told The Nightly.<\/p>\n \u201cOlder Australians are tending to spend more on those key services, particularly healthcare but also energy and that does flow through to their living costs.\u201d<\/p>\n Rebates ending<\/p>\n While the national $300 electricity rebates run until the end of the year, Western Australia has ended its $400 annual power subsidies and Queensland has wound up its $1000 program.<\/p>\n The one-third annual increase in power bills is more likely to affect older people who live off the age pension or superannuation.<\/p>\n Relief for home borrowers is looking less likely, with the futures market no longer expecting any more relief this year.<\/p>\n The Reserve Bank of Australia on Tuesday released a dire set of inflation forecasts as it kept the cash rate on hold at 3.6 per cent for the second straight monetary policy board meeting.<\/p>\n Governor Michele Bullock admitted the RBA was unsure about the hypothetical neutral cash rate level, where it was neither restrictive nor stimulating spending in an economy with \u201cexcess demand\u201d.<\/p>\n \u201cWe have judged that things are restrictive but the closer you get to neutral, the harder it is to know,\u201d she told reporters on Tuesday.<\/p>\n Inflation not slayed<\/p>\n Belinda Allen, the Commonwealth Bank\u2019s head of Australian economics, said headline inflation was likely to remain above 3 per cent until the end of 2026, as temporary factors like higher electricity prices lingered for another year.<\/p>\n \u201cWe think it\u2019s a late 2026 story. Definitely, the next couple of quarters, we do have inflation staying a little bit higher,\u201d she told The Nightly. \u201cIf we do see a longer period of the cash rate remaining in restrictive territory, that\u2019s also going to put some downward pressure on inflation.\u201d<\/p>\n Sunny Kim Nguyen, the head of Australian economics with Moody\u2019s Analytics, said the RBA\u2019s admission on Tuesday that its own economists were unsure whether the 3.6 per cent cash rate \u201cremains a little restrictive\u201d meant it would be unlikely to cut the cash rate before mid-2026.<\/p>\n \u201cDecember and February are off the table. Mid-2026 is the earliest, and that is conditional. The RBA needs to see inflation falling convincingly \u2014 actually falling, not just forecast to fall \u2014 before it moves again,\u201d she said.<\/p>\n ANZ head of Australian economics Adam Boyton said a bad inflation number for the September quarter could be a one-off and not a trend. \u201cBusiness survey measures of prices and costs also show that the broader trend toward inflation around the mid-2s remains on track,\u201d he said.<\/p>\n Nonetheless, the RBA is now expecting headline inflation to hit 3.7 per cent by June 2026 for the first time in two years.<\/p>\n Underlying, or trimmed mean inflation without the big-moving items, is forecast to stay above the 2.5 per cent level, or the mid-point of the RBA\u2019s 2 to 3 per cent target, until December 2027, along with the consumer price index.<\/p>\n Of the big four banks, the Commonwealth Bank is the only one declaring the RBA had finished with rate cuts.<\/p>\n ANZ, Westpac and NAB see one more cut in 2026, with May shaping up as a more likely scenario than February.<\/p>\n Employee living costs had been growing at a faster pace than age pension costs in 2022 and 2023, when the Reserve Bank raised interest rates 13 times.<\/p>\n That changed this year following the RBA\u2019s three rate cuts in February, May and August.<\/p>\n","protected":false},"excerpt":{"rendered":"Boomer retirees, not workers, are the surprise losers from Australia\u2019s renewed inflation problem that could delay or cancel…\n","protected":false},"author":2,"featured_media":264253,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164,193],"class_list":["post-264252","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy","tag-wealth"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/264252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=264252"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/264252\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/264253"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=264252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=264252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=264252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}