Latest National Accounts figures reveal that high inflation and rising interest rates are taking their toll on the Australian economy with GDP growth moderating to 0.5 per cent in the December quarter.

“With economic activity continuing to slow, today’s accounts release is a call to action for policies that boost competitiveness, foster productivity growth and enhance Australia’s economic dynamism,” ACCI chief executive Andrew McKellar said.

“Moderating economic growth signals the Reserve Bank’s efforts to rein in inflation are starting to take effect. Monthly price growth fell from 8.1 per cent in December to 7.4 per cent in January, however inflation remains far too high and must be brought back to target.

“The impact of rate rises is becoming more apparent with the growth rate of household consumption dropping considerably to 0.3 per cent, down from 2.2 per cent six months prior. Mortgage holders in particular are starting to tighten their belts and reduce spending.

“Exceptionally strong terms of trade drove the lion’s share of economic growth, however we cannot afford to rely on high commodity prices to maintain growth given the uncertain global economic outlook.

“Business investment fell in the quarter and will need to improve to lift growth. Moving ahead, businesses require policies that provide certainty and stability, fostering the right environment and confidence for investment.

“As the government prepares for the May budget, focus should turn to building a nation that is more resilient, more productive, and more competitive to ensure businesses can create highly paid, highly skilled jobs to boost living standards for Australians.

“Reining in spending to sustainable levels and a commitment to structural fiscal repair is essential to avoid locking in high inflation for an extended period.