On November 26, 2023, Australia's Bureau of Statistics (ABS) will begin publishing a complete monthly inflation index. This decision comes amid rising unemployment and increasing pressure on the central bank.
New Inflation Index
The Australian Bureau of Statistics (ABS) announced that it will publish a complete monthly inflation index starting with data for October on November 26. Until now, the ABS had only released a partial consumer price index based on a limited set of items. Reserve Bank of Australia Governor Michele Bullock stated that the lack of up-to-date inflation data has hindered effective economic policy.
Rising Unemployment
According to the Wall Street Journal, the Reserve Bank of Australia is facing new challenges in the labor market, with the unemployment rate climbing to 4.3% in June following two months of weak hiring, ending a record low of 4.1%. Despite this, the RBA decided to keep interest rates steady in the face of slow economic growth and acceptable inflation levels.
Potential Policy Changes by RBA
If Q2 inflation rises, maintaining current rates may become difficult to justify. While the RBA previously avoided sharp rate hikes to prevent worsening employment situations, current market pressures may require more decisive action. The cash rate remains above neutral level, allowing for potential cuts but also introducing the risk of renewed inflation.
With the upcoming release of the complete inflation index and rising unemployment, the pressure on the Reserve Bank of Australia is mounting. Important decisions lie ahead for the RBA as the economic landscape shifts.
