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Inflation hits a 30-year high
Ronald MizenEconomics correspondent
Sep 29, 2022 – 12.33pm


Annual headline inflation jumped to 7 per cent in July, the highest level since mid-1990, driven by soaring building costs, global oil prices and a marked uptick in the price of fresh fruit and vegetables.

The pace of price rises dipped slightly in August to 6.8 per cent as petrol prices eased, however the reprieve will likely be temporary as the soaring cost of energy across the east coast begins hitting households.

Economists said the results bolstered the case for th Reserve Bank of Australia to press ahead with a fifth consecutive 0.5 percentage point increase in the official interest rate when its board meets next Tuesday.

Marcel Thieliant, senior economist at Capital Economics, said while there were signs recent drivers of price rises – building costs and petrol prices – were easing, “price pressures elsewhere continue to strengthen.”

“We still expect a surge in utilities prices to lift inflation closer to 8 per cent this quarter,” Mr Thieliant said, noting the Australian Bureau of Statistics’ new monthly inflation data does not include electricity bills.

‘No sugar coating it’

Treasurer Jim Chalmers said the latest figures confirmed what everyone already knew – “prices are rising, and their wages just aren’t keeping up.”

“There’s no sugar coating the fact Australians right now are doing it tough, with falling real wages, rising prices, and higher interest rates,” Dr Chalmers said citing cost-of-living support in the upcoming October budget.

ABS chief statistician David Gruen pointed to the increasing role of food in annual price changes. Food and non-alcoholic beverages inflation increased to 9.3 per cent in the 12 months to August, with rises in almost all categories.

Fruit and vegetable prices increased from 9.1 per cent in June, to 18.6 per cent in August, while meat and seafood recorded 7.3 per cent growth through the year.

KPMG chief economist Brendan Rynne said excluding volatile items such as food, core inflation still rose to 6.1 per cent to August, which is the highest level since 1990 and still double the RBA’s 2–3 per cent target band.

Dr Rynne said KPMG expected the September quarter inflation result to be around 6.5 per cent before again lifting above 7 per cent later in the year due to the expiry of the fuel tax cut this week and rising food prices

“Today’s monthly inflation data is likely to add more ammunition for the RBA Board to continue to lift the cash rate by another 50 basis points [to2.85 per cent] at next week’s meeting,” he said.
Job vacancies dip

Meanwhile, the number of job vacancies dipped by 10,000 in the three months to August to 471,000, which is still the second-highest level on record, with almost one position for every unemployed person.

The total number of businesses reporting vacancies increased, however, from 25.2 per cent of firms in May to 26.7 per cent in August.

“The number of job vacancies declined by 2 per cent over the three months to August 2022, although remained elevated in historical terms and are still more than double pre-pandemic levels,” the ABS’ Lauren Ford said.

Demand in certain sectors of the economy continued to grow. Retail trade positions were up 15 per cent quarter-on-quarter, while accommodation and hospitality was up 14 per cent. Western Australia and Tasmania led the push lower, with falls in vacancies of 7 per cent and 17 per cent respectively.

Australian Retailers Association chief executive Paul Zahra said the latest vacancy data was a significant concern for businesses looking to ramp up their workforces for the festive trading season.


“Labour shortages are the number one concern for retail currently with many businesses forced to reduce trading hours in response to worsening staff availability,” Mr Zahra said.

“Retailers have already begun their recruitment drives for tens of thousands of additional Christmas casuals to cope with demand, however with the scale of the labour crisis getting worse for retail, it’s unlikely businesses will be able to fill all the roles they have available to trade at their full potential.

“The job vacancy figures released today align with the experiences of our ARA members, with over 90 per cent saying labour shortages have stayed the same or gotten worse for their businesses over the past three months.”