Rising energy prices are set to lift Australian inflation further above the RBA’s target in the months ahead. And while consumer confidence has soured in response to soaring inflation, the high household saving rate should cushion the blow to spending and we still expect a strong rise in consumption this year. In fact, the RBA is becoming increasingly concerned that high inflation will cause inflation expectations to become unanchored. We think these concerns will reach a tipping point after the Q1 inflation data, prompting the RBA to hike rates in June.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services