The RBA should not overreact to a small rise in inflation from 3.6% to 3.8% but should in fact cut interest rates at its next meeting to stop more job losses and ease growing household financial distress, said ACOSS.
Since rates began to rise in mid 2022, 75,000 people have lost their jobs, with another 60,000 under threat if the unemployment rate reaches 4.5% next year as Treasury predicts.
“We are deeply concerned that if the RBA doesn’t cut rates next week, more people will be joining the 900,000 people who are already on woefully inadequate unemployment payments,” said ACOSS Acting CEO Edwina MacDonald.
“We have reached a turning point in the fight against inflation, which has already been reduced by half from 8% to under 4%, with many central banks now considering rate cuts.
“The living standards of people on low and modest incomes have been decimated over the past few years, partly due to inflation but also due to higher interest rates.
“The danger now is not this temporary pause in reductions in inflation, but a faster rise in unemployment. The cure could become worse than the disease, as the impact of past increases in interest rates flows through to jobs and incomes.
“We trust that the RBA will keep sight of this bigger picture and not overreact to the small rise in the headline CPI revealed today. Its preferred measure of inflation, the ‘trimmed mean’, fell slightly from 4% to 3.9%.
“Instead of relying excessively on the blunt tool of rate hikes, inflation can be better addressed by tackling price rises at their source, such as curbing excessive increases in rents.”
ACOSS is calling on the government to:
Work with states and territories to better regulate soaring rental markets
Take further action to reduce out of pocket costs such as child care and health services
Protect people on the lowest incomes who are facing destitution amid the rising price of essentials by lifting Jobseeker and related payments
Take further action to reduce energy costs by investing to make homes energy efficient for people on low incomes
Invest in a jobs and training offer for the 550,000 people unemployed long-term to improve their employment prospects
