Judo Bank Economic Adviser Warren Hogan says if inflation picks up but wage growth remains low, it could be a real problem for the government ahead of the election as “people’s standards of living” in Australia will decline.
The remarks come after RBA Governor Phillip Lowe addressed inflation fears when he spoke at a business event on Tuesday.
Governor Lowe said if things change the RBA will change its view and an earlier rate hike could be possible but at this stage rates will remain as they are until its 2024 target.
Mr Hogan said its the view of many economists that the inflation crisis overseas is a much bigger threat to Australia than what the RBA has suggested.
“The ABS releases its Wage Price Index tomorrow and the governor (of RBA) says it’s going to stay low – it’s only at two per cent – wages do lag,” he told Sky News Australia.
“But I am concerned that we’re going to see inflation pickup because of these global pressures, the energy cost pressures, various things happening – but wages aren’t.
“And of course this could be a real problem for the government at some stage, maybe even ahead of the election, if these pressures are starting to emerge now – when you’re seeing people’s standards of living go back in this country.”
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