Terry McCrann: Inflation figure points to very sombre year for families

The ‘good news’ is that it could have been worse for home loan borrowers. But that’s where the ‘good news’ ends.

Food prices were up 2 per cent in the quarter and nearly 6 per cent for the year. Picture: Flavio Brancaleone

The inflation figure locks in an official interest rate rise from the Reserve Bank next Tuesday and all but certainly at the same 50 points – half-a-per cent – of the last two increases.

The ‘good news’ is that it could have been worse for home loan borrowers. If the inflation number had gone higher than the 6.1 per cent, it could have forced the RBA to hike by 75 points.

But that’s where the ‘good news’ ends.

The actual price rises we saw both in the June quarter itself and over the year, hit Australians across a very wide – and, disturbingly, widening – front.

The cost of building a house was up 2.5 per cent in the quarter and a thumping 9 per cent over the year. That’s just going to get worse as building product shortages send prices even higher.

Food prices were up 2 per cent in the quarter and nearly 6 per cent for the year. There have been further rises and shortages into this current quarter.

And of course transport – petrol prices mostly – were up 13.1 per cent over the year, although the increase ‘eased’ to just 2.5 per cent in the June quarter itself.

But the federal government has ‘locked in’ a 24c increase in petrol prices in September – 22c excise and 2c of GST – when the six-month cut in the halving of the excise runs out.

Housing, food and petrol – that adds up to a huge slice of the weekly budget. And then add on those rising interest rates and higher repayments on home loans.

Family budgets will be under extreme stress – and the treasurer is telling them not to chase bigger wage increases.

All that sure is, to use the treasurer’s word, “confronting”.

Further, disturbingly, there was evidence of the price increases spreading across the economy.

Household furniture, clothing and footwear all showed bigger price rises in the latest quarter after being subdued going back into 2021.

All of those strike directly at the household budget.

Thursday we get a “statement on the economy” from new Treasurer Jim Chalmers.

It’s not a ‘mini-budget’ which might have delivered some tax relief – Labor’s replacement budget comes in October.

With more rate hikes from the RBA likely, it makes for a very sombre countdown for households over the rest of the year and into 2023.