RELATED: Aussies to be \u2018hit like a hammer\u2019<\/a><\/p>\n![\"\"\/](\"data:image\/svg+xml,%3Csvg)
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The latest CPI figures show trimmed mean moving in the wrong direction. Source: ABS, Canstar.<\/p>\n
If the board was looking for some cover to justify not hiking, it could tease something out of hours worked falling 1.1 per cent in May and underemployment ticking up to 5.9 per cent in the Australian Bureau of Statistics data. <\/p>\n
But the dip is a single-month blip after hours worked spiked in April in the midst of a structural uptrend. The overall employment story is strong, and it arrives after an ANZ-Roy Morgan inflation expectations survey hit a 16-year record high.<\/p>\n
That\u2019s well above levels sparked during 2022\u2019s worst inflation explosion \u2013 and a result that property analyst and commentator Michael Matusik said should be treated as \u201ca flashing red warning light\u201d for anyone with a mortgage.<\/p>\n
The RBA has historically increased rates when inflation expectations exceeded 5 per cent, said the Matusik Missive. The four-week moving average sits at 6.0 per cent \u2013 with Mr Matusik warning more rate hikes are inevitable.<\/p>\n
\u201cI think the RBA should have lifted rates in June,\u201d he said. \u201cIf inflation expectations remain elevated and underlying inflation stays above target, then further increases in August, September and November should not be ruled out.\u201d<\/p>\n
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Inflation expectations as per the ANZ-Roy Morgan report, flagged by Michael Matusik. Source: Matusik Missive<\/p>\n
An August hike alone would take the cash rate to 4.60 per cent \u2013 which Canstar data insights director Sally Tindall warned is uncharted territory for many borrowers.<\/p>\n
\u201cIf it goes up another notch we\u2019ll be in territory not seen since 2011, when debts were a lot lower.\u201d<\/p>\n
She cautioned borrowers that the June pause in hikes by the RBA \u201cshouldn\u2019t be mistaken for the end of the tightening cycle\u201d because \u201cthe Board certainly hasn\u2019t declared victory over inflation\u201d \u2013 the central bank\u2019s core mandate.<\/p>\n
Three rate hikes since January have already added $272 a month to repayments on a $600,000 mortgage, according to Canstar. If Mr Matusik\u2019s three further hikes arrive across August, September and November, that figure could double \u2013 meaning a rise of around $548 a month in total since this year\u2019s tightening cycle began.<\/p>\n
For those on an $800,000 mortgage, that cumulative repayment increase would reach around $730 a month for 2026, and $915 extra on a $1 million loan, compared to last year\u2019s monthly repayments.<\/p>\n
Adding to the pressure, the federal government\u2019s temporary fuel excise discount is being wound back \u2013 halved to 16 cents per litre from July 1, with the remaining relief removed entirely in August \u2013 arriving alongside a 4.75 per cent minimum wage increase that covers around one in five Australian workers.<\/p>\n
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Seasonally adjusted employment and hours worked. Source: ABS<\/p>\n
Wednesday\u2019s Australian Bureau of Statistics CPI data did nothing to appease the situation, with trimmed mean inflation \u2013 the result the RBA watches closest \u2013 rising to its highest level in almost two years at 3.6 per cent annually.<\/p>\n
\u201cCore inflation has risen for the second consecutive month, returning to September 2024 levels,\u201d Ms Tindall said. \u201cThis is a disappointing result given the central bank has been fighting it for four years.\u201d<\/p>\n
Mr Matusik said \u201cfor most of the past decade, inflation expectations generally sat between 4 per cent and 6 per cent. They collapsed during Covid to around 3.2 per cent, before surging again. Now they have broken through every previous peak. That matters.\u201d<\/p>\n
\u201cThe key issue is not simply where inflation is today. It is whether households and businesses still believe inflation will return to the RBA\u2019s target range of 2 per cent to 3 per cent.\u201d<\/p>\n
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Impact of a further 0.25 hike on monthly repayments. Source: Canstar<\/p>\n
Of the major banks, only Westpac retains a hike forecast, with economists Neha Sharma and Sian Fenner saying Wednesday\u2019s trimmed mean result meant they retained \u201cour view that further cash rate increases are coming, with the next hike likely at the August meeting.\u201d<\/p>\n
The next RBA board meeting is scheduled for August 10 to 11, with key data points still to come \u2013 June quarter CPI on July 29 and the June monthly household spending indicator on August 4.<\/p>\n
Canstar found around 13 per cent of big four bank home loan customers already have no repayment buffer, including offset accounts \u2013 with a small proportion falling behind on repayments.<\/p>\n
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Big four bank customers\u2019 home loan repayment buffers. Source: Canstar<\/p>\n
That anxiety is showing up in consumer sentiment data with the ANZ-Roy Morgan Consumer Confidence report for the week ending June 21 finding mortgage holders were the only cohort to record a decline in confidence \u2013 even as overall consumer confidence rose 2.1 points after the RBA\u2019s decision to hold.<\/p>\n
ANZ economist Sophia Angala attributed the confidence decline to the RBA retaining the option to hike rates should inflation prove more persistent.<\/p>\n
This after RBA Governor Michele Bullock confirmed the board \u201cdoes not rule out further tightening in monetary policy if that is what is required\u201d.<\/p>\n
Housing costs were among the largest drivers in Wednesday\u2019s inflation data. Electricity prices surged 21.1 per cent annually following the end of government rebates, while rents rose 3.6 per cent and new dwelling costs climbed 5.6 per cent.<\/p>\n
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Of the big four banks, only Westpac still retains a hike forecast for this year. Picture: Jake Nowakowski<\/p>\n
Food inflation also accelerated, rising from 2.8 per cent to 3.3 per cent on the back of supply chain pressures arising from the conflict in the Middle East.<\/p>\n
Market services inflation \u2013 the measure most closely watched for signs of entrenched domestic price pressure \u2013 also edged higher to 3.8 per cent annually, driven by increases in eating out and vehicle maintenance costs.<\/p>\n
That eating-out pressure is showing no sign of easing. Separate ABS data released Thursday found household spending on hotels, cafes and restaurants rose 1.9 per cent in May \u2013 driven primarily by restaurant meals, takeaway and dining out, with higher catering and hospitality prices cited as a contributor. <\/p>\n
The ABS noted transport spending was distorted by the normalisation of Middle East-related flight refunds \u2013 stripping that out, underlying household spending rose 0.6 per cent.<\/p>\n
Despite all the signs, three of the four major banks believe the cash rate has peaked, with ANZ, NAB and CBA seeing 4.35 per cent as sufficient for the remainder of 2026.<\/p>\n
Ms Bullock is firm on one point: \u201cI want to be very clear that inflation remains too high\u201d.<\/p>\n
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Reserve Bank of Australia\u2019s Governor Michele Bullock says the board has not ruled out further tightening. Picture: NewsWire \/ Christian Gilles<\/p>\n","protected":false},"excerpt":{"rendered":"RBA Governor Michele Bullock has held that inflation is too high and the board will do what is…\n","protected":false},"author":2,"featured_media":511359,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-511358","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/511358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=511358"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/511358\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/511359"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=511358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=511358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=511358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}