Cooling inflation data is positive news for small business
26 Jul 2023|
Lower-than-expected price increases will come as welcome news for small businesses and consumers across the country. However, with price pressures remaining stubbornly persistent, returning inflation to the central bank’s 2-3 per cent target band remains challenging.
Australia’s annual inflation rate fell to a 12-month low of 6 per cent in the June quarter, easing pressure on the Reserve Bank to raise rates when it meets next week.
“Further cooling of inflation in the June quarter is the latest positive sign that the Reserve Bank’s interest rate rises are having their desired effect on price pressures,” ACCI chief executive Andrew McKellar said.
“With falls now coming through, today’s data is encouraging for many small business owners who are now seeing the costs of doing business starting to ease.
“While monthly jobs growth remains incredibly robust, other signs of demand, including job vacancies, are showing signs of easing. Consumer spending is also strong, but with less intensity, and the monthly pace of core inflation has also slowed.
“Despite the respite, services inflation continues to rise. Small businesses in the services sectors are likely to be hit by a double blow as wages growth accelerates in the months ahead, in part due to the Work Commission’s annual wage determination.
“It’s essential that both the Reserve Bank and the government work in unison to navigate the narrow path. Balancing inflationary pressures while sustaining the economy as close as possible to full employment remains the primary challenge for both monetary and fiscal policymakers.
“Business reiterates its call for the Reserve Bank to hold rates at its August meeting, and take stock of the existing leverage of 12 rate increases since the beginning of the Reserve’s current tightening cycle.”