Treasurer Jim Chalmers said Australia will have to navigate “rough waters” in the months ahead as inflation and interest rates continue to weigh on households.
Chalmers said 3AW this morning that people living week-to-week would once be the hardest hit by rising costs, which are expected to continue throughout the year.
“Inflation is higher where people have no discretion,” Chalmers said.
“Think of gas prices, energy prices, groceries, the kinds of things that Victorian families can’t live without. These are the areas that are growing the most.
“One of the reasons why this inflation is so damaging to our economy is that we don’t want people to have to choose between different parts of their household budget, which they couldn’t avoid in normal times.”
With the average mortgage balance in Australia standing at $330,000, Chalmers said people would need to find an extra $87 a month to cover the cost.
In Victoria, where the new mortgage average is $637,000, homeowners would have to shell out an additional $174.
Chalmers said the Reserve Bank’s decision to hike the exchange rate by half a percentage point yesterday was “really tough news for a lot of people who are already dealing with a spike in the cost of living.” .
“Unfortunately, whether it is the Reserve Bank, the Treasury or the other analysts, there is now an almost universal opinion that inflation will rise before it begins to subside, so there is no point to revolve around that,” he said.
Chalmers said Labor would deliver on its election promises in the October budget, regardless of mounting cost-of-living pressures.