As anticipated, the Reserve Bank has increased interest rates for the fourth straight month, with the cash rate now sitting at a six year high of 1.85%. Unfortunately, the economic challenges are likely to get worse before they get better, as outlined by Treasurer Jim Chalmers in his economic update to Parliament last week. Inflation is forecast to peak at 7.75% later this year before reducing to 5.5% by the middle of next year and normalising in 2024.
Whilst inflation in Australia is tracking lower than overseas, including in the US and UK, the current economic outlook has many consumers and business owners on edge.
The June retail trade numbers look pleasing on paper but are not necessarily a true reflection of sector performance given the inflationary landscape. Sales increased 12% on a year ago, however consumers are paying more for everyday items, while at the same time, business operating costs have increased significantly.
Labour and skill shortages continue to be a pressing issue, highlighted in a new report by the Tech Council of Australia, which shows vacancy rates in tech are 60% higher than the national average and forecast to grow. We know that many of the skills shortages retailers are experiencing are in the data and technology space and ongoing collaboration is needed from government and industry to address the barriers that are preventing Australians from accessing tech job opportunities.
The ARA is championing many solutions in this space with all levels of governments – from mobilising mature workers to increasing women’s workforce participation. We continue to press for measures which support the return of international students and skilled migrants.