Figures released today show inflation at 7.8 per cent in the December quarter, renewing pressure on the Reserve Bank to continue raising interest rates when it meets for the first time for 2023.

The elevated level of inflation is of concern for business, and underlines the importance of the government ensuring its budget and broader policy settings are right to reduce inflationary pressures.

“With price pressures continuing to increase, it is far too soon to declare inflation has been beaten,” ACCI chief executive Andrew McKellar said.

“Even if inflation is peaking, it is doing so at a three-decade high.  The Reserve Bank is right to be wary about high prices persisting. Until there is a very definite, durable decline in inflation, the RBA is likely to press ahead with a rate rise at its February meeting.

“For business, international supply chain snags continue, the labour market remains tight, and energy prices continue to increase.

“Surging demand in the lead up to the Christmas holidays was a key driver of inflationary pressures, with price rises recorded across travel, accommodation, food, and other discretionary expenses.

“The Reserve Bank has a difficult path out of the current high inflation environment and must be cautious that its next steps don’t squeeze the life out of households and businesses.

“The task for the government in the upcoming May budget will be to build confidence that public finances are being put in order. Now is the time to make very serious progress in the task of budget repair,” Mr McKellar said.