Businesses prepare for 'increasing inflationary pressure'
Employers and businesses have recently expressed concern over the Reserve Bank of Australia’s (RBA) decision to lift the cash rate to 0.35 percent. The RBA’s move to raise the cash rate is reportedly the first time in more than a decade.
In a media release, the Australian Chamber of Commerce and Industry (ACCI) said that the change reflects the “interrelated challenges” of rising inflation, supply chain bottlenecks, and labour shortages that many industries face across the country.
ACCI’s chief executive Andrew McKellar said that the RBA’s decision is “not only indicative of the building inflationary pressures on cost of living, but also reminds us that the cost of doing business is also increasing.”
“The RBA is independent of the government and must make economic decisions as it sees them. With interest rates at extraordinarily low levels for the past few years, it was expected that the RBA would begin the process of tightening monetary policy,” McKellar said.
The ACCI had also cited rising input and labour costs, saying that these factors force businesses to raise their prices or absorb higher costs within “already thin margins.”
Employers further pointed their concerns toward global politics and tensions, saying supply chains are congested due to the conflict in Europe and lockdowns in China. As international events continue to “drive up the cost of everything from washing machines to microchips,” the ACCI explained that small businesses are “bearing the brunt” of the disruptions.
“Businesses are already facing the worst labour and skill shortages in almost 50 years. The RBA’s forecast that the unemployment rate will further decline to around 3 ½ per cent by early 2023 will stretch an already tight labour market,” McKellar warned.
“Until we see some of those external supply chain problems ease, until we get more workers coming back into the labour force, and until adjustments are made to monetary policy, inflationary pressures are likely to remain for some time,” he said.
