The cost of living pain can now be shown in the results of a lot of retailers*, as well as in the increase for loan delinquency. In a "normal" cycle, this should lead to a decrease of interest rates.
However, last CPI figures showed that inflation is still above target in Australia and struggles to get lower. Last CPI figures** : + 3.4 % yoy in Feb, + 3.5 % yoy in March and + 3.6 % yoy in April. If we exclude volatile items (or look only at seasonally adjusted figures), the trend is the same. Next monthly CPI will be published on Wednesday.
As inflation is still driven by services, future inflation will probably depend on wages, where increases should moderate as the job market is under less pressure now. As discussed before, the element which continues to put pressure on prices (apart from protectionism) : government spendings as government wants to help households (due to the increase of living costs), while there is pressure to increase other costs (defense, climate change, ageing population..). This situation is not specific to Australia.
* today share price performance : - 49 % for Cettire, - 60 % for City Chic, - 10 % for Motorcycle Holding. ** still driven by essential spendings (food, rent, health, education, insurance).
