Watch the full interview with Westpac\u2019s Luci Ellis from 11am on Business Now with a SkyNews.com.au subscription.<\/a><\/p>\nThe Australian Bureau of Statistics on Wednesday revealed that inflation lifted to 3.8 per cent, exceeding economist expectations and hurting hopes of future interest rate cuts.<\/p>\n
Reacting to the rise, Westpac\u2019s chief economist Luci Ellis said the main contributors to inflation picking up were outside Australia, but noted there were some government-induced pressures.<\/p>\n
\u201cNone of this is about strong global domestic demand pushing up prices,\u201d Ms Ellis told Business Weekend.<\/p>\n
\u201cThere are some supply things going on and there are some government policies \u2013 at all levels of government \u2013 that have been running those parts of the inflation basket higher than the average.<\/p>\n
\u201cThat doesn\u2019t mean we shouldn\u2019t be concerned. There are some elements of the rest of the inflation basket that are a little bit high, but we shouldn\u2019t overblow this result.\u201d<\/p>\n
October marks the fourth month in a row where the CPI has increased and comes as the government is accused of fueling the pro-longed cost of living crisis.<\/p>\n
Total public spending is worth about 28 per cent of GDP and has surged in recent years due to large-scale transport projects.<\/p>\n
AMP’s Diana Mousina said public building and engineering construction activity has been trending higher since 2015 and recently reached a record level of around five per cent of GDP.<\/p>\n
“While private sector construction remains larger, it has been on a downward trend and has essentially flatlined since 2020 at about eight per cent of GDP,” Ms Mousina told investors.<\/p>\n
Meanwhile, the largest contributors to inflation\u2019s rise in the 12 months to October were housing, up 5.9 per cent, while food and non-alcoholic beverages and recreation and culture both rose 3.2 per cent.<\/p>\n
Electricity costs spiked 37.1 per cent in the 12 months to October as various state government rebates have been used up by households and the impact of the Commonwealth Energy Bill Relief Fund rebates rollout.<\/p>\n
Without any impact from the federal and state electricity rebates, electricity prices jumped five per cent.<\/p>\n
Ms Ellis said the recent figures showed there continues to be \u201ca bit more inflation in the system than people thought\u201d.<\/p>\n
\u00a0\u201cSo much of the very high numbers within the overall basket were driven by policy \u2013 things like water bills in Sydney, the electricity rebates over the year winding off,\u201d she said.<\/p>\n
\u201cThere have also been some of the usual one off things on certain foods because of weather and supply shortages – beef and veal was up quite a bit, lamb was up quite a bit and while egg prices are now falling, over the year they are still well up.<\/p>\n
\u201cCoffee is a known global issue.\u201d<\/p>\n
Trimmed mean inflation – the middle 70 per cent of price changes core to the RBA’s rate call – rose to 3.3 per cent from 3.2 per cent in the month prior.<\/p>\n
This was well outside the RBA’s 2-3 per cent target band.<\/p>\n
Despite the large rise over the past 12 months, inflation was unchanged on a monthly basis in October.<\/p>\n
Treasurer Jim Chalmers acknowledged the recent uptick of inflation was \u201chigher than we\u2019d like\u201d but lauded the monthly figure where prices remained relatively unchanged.<\/p>\n","protected":false},"excerpt":{"rendered":"Westpac\u2019s chief economist has sounded the alarm about government policy pushing up inflation after price rises soared once…\n","protected":false},"author":2,"featured_media":317652,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,21450,164,17119,20309,5465,179207,124606,121546,8420],"class_list":["post-317651","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-cpi","tag-economy","tag-gdp","tag-government-spending","tag-inflation","tag-luci-ellis","tag-price-pressures","tag-public-spending","tag-westpac"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/317651","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=317651"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/317651\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/317652"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=317651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=317651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=317651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}