High inflation “hurts everyone” but especially those on low and fixed incomes, the head of the Reserve Bank of Australia has stressed following a sluggish economic growth report.
Governor Michele Bullock warned rising prices eat into savings and erode purchasing power, and should inflation stay higher for longer, more borrowers will end up in mortgage stress and some even forced to sell up.
“A really important point to note here, is that lower income borrowers are over-represented in the group of people who are really struggling,” Bullock told the Anika Foundation on Thursday.
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Her remarks followed a tepid 0.2 per cent expansion in the economy in the June quarter and a 1 per cent through-the-year increase.
The RBA was expecting a subdued reading, with a slower economy an expected consequence of higher interest rates, jacked up and kept elevated to weaken demand and bring down inflation.
Yet a weaker economy means a deteriorating labour market and higher unemployment, which the central bank has been trying to mitigate by tolerating a longer path to within-target inflation than many of its peers.