Mortgage payments are expected to rise tomorrow, with experts predicting another Reserve Bank interest rate hike.
Australia Institute chief economist Richard Denniss said rates could rise between 0.25% and 0.4%.
“Anyway, the Reserve Bank has signaled that we’re going to see higher interest rates over the next six to 12 months,” Denniss told Today.
“That will mean mortgage payments will increase by thousands of dollars depending on the size of people’s mortgages.”
Inflation will also weigh on household budgets, with Treasurer Jim Chalmers saying it was worse than expected.
“Treasury clearly didn’t see this inflation coming, or they saw it coming and in the budget documents they didn’t want to point it out,” Denniss said.
“The good news is that most of this inflation is caused by one-off things, big increases in the cost of some imported goods, including energy obviously. So that doesn’t mean we’re stuck with high inflation for still.”
However, he said that in the short term people would face rising prices and falling real wages.
Denniss blamed the last factor on employers.
“Ultimately employers are responsible for wage growth in Australia,” he said.
“Now we haven’t seen any employers come forward to offer pay rises. In fact, with prices going up more than 5%, it should be completely normal to see wages go up by at least minus 5%, but a lot of companies are saying, no, we’re not going to do that.”
He said with interest rates rising while wages stagnated, employers would have to show some willingness to pay more.
“Otherwise, governments and the Fair Work Commission will have to step in and get things done,” he said.