In its final meeting of the year, the Reserve Bank has lifted the cash rate target by a further 25 basis points to 3.1 per cent, signalling that inflation is still too high, and further rate rises are likely.

“Despite eight consecutive rate rises, inflationary pressures continue to simmer. The Reserve Bank must be wary that we are not yet out of the woods,” ACCI chief executive Andrew McKellar said.

“Inflation is still too high, and pressures will continue given the expected strong growth in household spending over the Christmas period. Coupled with wages growth at 2.9 per cent for the September quarter and persistently low unemployment, demand remains robust.

“The risks to the economic outlook linked to higher inflation, supply chain disruptions and the energy price shock, have begun to take their toll on business. Fresh ABS data shows gross operating profits slumped 12.4 per cent during the September quarter.

“As RBA Governor Lowe has warned, higher labour costs are feeding into higher prices for goods and services, increasing the risk of a wage-price spiral. Granted the government’s radical expansion of untested multi-employer bargaining, the threat of entrenched inflation becomes all the more likely.

“While the Reserve Bank continues to address the demand side of the equation, the federal government needs to address the supply side. With National Cabinet meeting this Friday, a plan to address skyrocketing energy prices, without further stoking inflation, is a critical priority for families and for businesses.