Aussies face double slug with cost of living pressures to soar

Australians are set to face a double-pronged spike in living costs with interest rates due to rise as temporary relief on petrol prices comes to an end.

Oct 04, 2022, updated Oct 04, 2022
A fuel tanker is seen at the Caltex refinery in Brisbane. Federal excise is to be reapplied to fuel, pushing up bowser prices. (AAP Image/Dan Peled)

A fuel tanker is seen at the Caltex refinery in Brisbane. Federal excise is to be reapplied to fuel, pushing up bowser prices. (AAP Image/Dan Peled)

People are nervously waiting on the central bank’s decision to potentially send rates to a near-decade high, further lifting borrowers’ mortgage repayments.

The Reserve Bank of Australia is tipped to hike rates by another supersized 50 basis point hike, although a smaller 25 basis point lift has not been ruled out.

Motorists have also been preparing for a jump in petrol prices as fuel excise rebounds to its full amount.

The impact wasn’t expected to be felt immediately, however a retail increase of around 25 cents per litre is expected to begin filtering through to prices this week.

Shadow Treasurer Angus Taylor said the government needed a clear plan to ease cost of living pressures ahead of its October budget.

“If the government is spending large amounts of money that otherwise wouldn’t have been spent, they’re putting the foot on the accelerator and the Reserve Bank has to put the foot on the brake,” he told the ABC.

Taylor also acknowledged the risk of a global recession.

“That’s why it’s so important that there be a plan from the government coming in this budget,” he said.

Labor frontbencher Bill Shorten said politicians shouldn’t be commenting on the independent processes of the RBA.

“The last thing punters want to see is the politicians just commenting and engaging in free commentary about the Reserve Bank,” he told the Nine Network.

He also acknowledged it would get tougher for Australians on fixed mortgage rates expiring at the end of the year or early in 2023.

“There will be a lot of pressure on people who have been able to absorb some of the rate rises, but it will hit like a tsunami,” he said.

Meanwhile, new building activity as measured by the Australian Bureau of Statistics is expected to pick up slightly after plummeting last month.

The sharp 17.2 per cent fall in building approvals in July was led by new apartment projects, which can vary wildly from month to month.

ANZ economists expect the number of approved building projects to lift by four per cent in August.

The ABS is also due to release lending data.

Rising interest rates have started to weaken lending appetite, with July figures showing new housing loan commitments falling 8.5 per cent.

Demand for new and existing housing is expected to keep contracting as higher borrowing costs deter buyers.

Also on Tuesday will be the release of the ANZ-Roy Morgan consumer confidence survey.

Consumer confidence has been hovering well below historical averages but lifted last week to hit a four-month high.

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