Unemployment at a 50-year low but inflation is a different story– April 2022
Despite Australia seeing one of the lowest level of unemployment in half a century alongside the first increases in interest rates in 12 years, there are signs that the nation’s consumers are not enthusiastic about future economic circumstances.
Data from the ABS last Thursday revealed that the jobless rate slipped below 4% in March to 3.95%, pointing to the strength of the labour force. NAB Chief Economist Alan Oster said the jobless rate is expected to fall even lower, reaching 3.5% by mid-2022 and remaining there through 2023.
However, consumers are still remaining downbeat with Westpac’s measure of consumer sentiment falling by 0.9% in April to its lowest level since September 2020. The survey reviewed higher level of inflations and prospect of higher interest rates weighing down on sentiment. ANZ Economists expect the month’s headline inflation data to rise to 4.7% with underlying inflation to reach 3.4%. This has been driven both by a combination of petrol prices rising more than 50% in a year and food prices hiking by 4% in just 3 months.
It is likely the RBA will be monitoring interest rates over the coming months to curb the sharply increasing cost of living but may expect to have a slowdown on Australia’s recovering economy.