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Jim Chalmers says inflation is heading to 7% as food and fuel prices soar

Stark warning about the economy for every Australian until the end of the year – as food and fuel prices rise

  • Inflation is expected to hit seven percent as Australians endure rising prices
  • Treasurer Jim Chalmers has warned inflation problem ‘worsens’
  • National average for gasoline hit second-highest level in history last week

Inflation is expected to reach seven percent as Australians face rising prices on high streets and supermarkets.

Treasurer Jim Chalmers has warned that inflation will “definitely exceed” 5.1 percent in the March quarter and get worse.

He told the ABC show Insiders on Sunday: “Inflation will be significantly higher than what was expected in the last government’s most recent budget.

“Certainly higher than the 5.1 percent we saw in the March quarter.”

He added: “This inflation problem is going to get harder before it starts to subside.”

Inflation is expected to reach seven percent as Australians face rising prices at the bow and in supermarkets

Inflation is expected to reach seven percent as Australians face rising prices at the bow and in supermarkets

Treasurer Jim Chalmers has warned that inflation will

Treasurer Jim Chalmers has warned that inflation will “definitely exceed” 5.1 percent in the March quarter and get worse.

Most developed countries are experiencing high inflation, largely due to supply chain disruptions, the large amount of money printed during the Covid pandemic and high energy prices as a result of Russia’s war against Ukraine.

The Reserve Bank has forecast a rate of about seven percent, which would be the highest since the rate of 7.7 percent in the June quarter of 1990.

“The Reserve Bank has said something like about seven percent, and I don’t think that’s entirely wrong,” said Dr Chalmers.

Inflation is bad news for mortgage holders because the Reserve Bank will raise interest rates to get it under control.

The market expects an interest rate of 3.65% by March 2023 with nine rate hikes from the existing level of 0.85 percent.

The national average for unleaded gasoline reached the second-highest level in history last week

The national average for unleaded gasoline reached the second-highest level in history last week

The dire warning comes after the national average for unleaded gasoline hit the second-highest level in history last week, with every state and territory now paying more than $2 a gallon.

The Australian Institute for Petroleum said the national average for gasoline rose 6.4 cents to 211.9 cents per liter in the week ending June 26.

This was a fraction lower than the March peak, ahead of the federal budget that halved fuel taxes for six months and cut prices by 22 cents per liter.

That tax benefit will be abolished on September 28.

Reserve Bank of Australia governor Philip Lowe expects inflation to slow in 2023.

“We are reasonably confident that inflation will show a downward trend next year,” he said at a meeting in Switzerland on Friday.

The problems in the global economy caused by Covid are gradually being solved.

“That’s not to say we might not get another shock.”

Treasury Secretary Katy Gallagher said the cost of living was “through the roof” and insisted that Labor policies would help.

“The cost of living is skyrocketing, we have rising interest rates, wages are still stagnant and that presents real challenges for people,” she told Sky News on Monday.

‘It is the government’s job to see how we can make our policy, our sensible investments stimulate the production capacity of the economy.’

This includes reforming Labour’s childcare facilities, skills training and harnessing the opportunities arising from renewable energy.

“These are things that will help the economy in the long run without increasing inflation in the short run,” Senator Gallagher said.

The Labor government is also looking at ‘sensible savings’ when it hands over its first budget in October.

Treasury Secretary Katy Gallagher (left) said the cost of living went 'through the roof'

Treasury Secretary Katy Gallagher (left) said the cost of living went ‘through the roof’

In any case, Australia is benefiting from a rise in commodity prices as a result of the war in Ukraine.

The monthly financial statement released Friday by the Treasury Department showed the underlying May budget deficit was $33.4 billion, compared to a 2021/22 deficit of $79.8 billion identified in the March budget. predicted.

Senator Gallagher welcomed the improvement as the budget Labor inherited was in “pretty rough shape”.

‘We see improvements; it’s in those areas that are very volatile, around commodity prices, and we’ve seen some easing there over the past week,” she told ABC radio.

“We don’t expect (the budget improvement) to continue at this rate.”

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