Australian Prime Minister Scott Morrison blamed a record surge in living costs on the war in Ukraine and Covid-related supply chain problems, which could jeopardize his chances of winning a national election due in a few weeks.
Consumer prices in Australia rose at the quickest annual rate in two decades in the third quarter, according to data released on Wednesday, as the cost of petrol, home construction, and food increased, fueling speculation that interest rates could rise from record lows as soon as next week.
“We’re still feeling the consequences of the fairly remarkable economic conditions that we’re living in,” Morrison said at a press conference, noting that the Covid-19 lockdown in China, as well as the Ukraine conflict, have stressed supply lines.
If the Reserve Bank of Australia raises interest rates at its next policy meeting on May 3, millions of Australian homeowners would pay more on their mortgages for the first time in a decade, just as the campaign for the May 21 election heats up.
Two of Australia’s main four banks predict a boost in the benchmark cash rate next week, while a third sees enhanced odds.
The last time the Fed raised rates during an election campaign was in 2007, when then-Prime Minister John Howard lost both the election and his seat. Morrison does not believe he will face a similar fate.
“We are in the midst of a global epidemic, with a war raging in Europe; these circumstances did not exist in 2007…. Australians are aware of this “he stated.
Morrison’s Liberal-National Party coalition, which has a one-seat majority in parliament, is lagging Labor in a campaign fought on climate change, national security, and cost-of-living challenges, according to polls.
Morrison has been bragging about how well his conservative administration handled the economy during the Covid-19 outbreak and how quickly the economy recovered. Real incomes, on the other hand, are in the red because inflation is rising twice as fast as wages.