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Copy link Copied Copy link Copied Subscribe to gift this article Gift 5 articles to anyone you choose each month when you subscribe. Already a subscriber? Login Inflation and higher taxes are eroding household incomes by triple as much as elevated interest rates, undermining Treasurer Jim Chalmers’ claim that the Reserve Bank of Australia’s monetary policy is “smashing” the economy. Analysis from market economists and the RBA show that household disposable income has been mostly squeezed by steep price rises for goods and services since the central bank imposed its first of 13 interest rate rises in May 2022.
A striking disconnect has emerged: RBA governor Michele Bullock and Treasurer Jim Chalmers. Alex Ellinghausen, Louise Kennerley Total household incomes grew 6.2 per cent over the year to June 30, national accounts data published last week showed.
Inflation wiped out 4.4 percentage points of the income gains, compared to higher interest rates eroding 1.3 percentage point and increased tax reducing real incomes by a further 1.
1 percentage point, according to former RBA economist Jonathan Kearns. Dr Kearns, now chief economist at investment manager Challenger, said it was “absolutely true” that inflation was having a bigger impact on household incomes than interest rates. Copy link Copied Copy link Copied Subscribe to gift this article Gift 5 articles to anyone you choose each month when you subscribe.
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