Fuel prices have seen a decline, inflation rates are easing, and the likelihood of another hike in interest rates seems to be diminishing. However, this does not necessarily mean that households and businesses are in the clear just yet.
Recent data reveals a cautious consumer base, with many opting to curtail their spending. At the same time, numerous businesses are choosing to absorb the increased costs rather than transferring them to customers, at least for the moment.
For those who still engage in sending letters, be prepared for an increase in your everyday expenses as postal rates are set to rise.
Are Australian businesses okay?
A recent survey conducted by the Australian Bureau of Statistics (ABS), which included 1,900 businesses, highlighted that 72 percent have been adversely affected by fuel prices and supply chain issues.
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Meanwhile, 48 per cent have absorbed the cost of higher fuel prices, with only 11 per cent increasing their prices and six per cent implementing a fuel surcharge or levy.
But business groups warn that many businesses are feeling the pressure and would only be able to absorb costs for so long, meaning prices could go up if the war in the Middle East and its impacts drag on.
What does cooler inflation mean for your mortgage?
Falling fuel prices helped bring down inflation in April, with the headline rate moderating from 4.6 per cent a month earlier to 4.2 per cent.
That’s because automotive fuel prices fell by 7 per cent after rising 32.8 per cent in March — though the drop came as the federal government halved the fuel excise, which cut the price of petrol and diesel by 26.3 cents a litre.
However, trimmed mean inflation — the Reserve Bank of Australia’s (RBA) preferred measure that strips out volatile items — edged higher to 3.4 per cent.
The figures prompted economists and analysts to update their forecasts, with many now betting the RBA will leave interest rates on hold when it next meets on 15-16 June.
Households tighten their budgets
Bolstering that case was household spending data, which fell 1.1 per cent in April — the biggest decline in nearly three years.
Transport spending was the biggest driver, down 4.7 per cent, as the federal government’s temporary halving of the fuel excise kicked in.
That was followed by clothing and footwear, down 2.2 per cent — and along with other discretionary categories, which also fell, suggests households are pulling back on nice-to-have purchases.
Meanwhile, food also fell 1.3 per cent, which ABS head of business statistics Tom Lay said reflects a return to normal levels after some households engaged in precautionary stockpiling in March following the outbreak of the war.
“The shift towards generic brands and cheaper products in supermarkets continued into April, reflecting ongoing price consciousness among households,” he said.
Letter writers to pay more
How much does a stamp cost in Australia?
It sounds like a pub trivia question — and the answer could soon be $1.85.
Yes, you read that right. Who remembers when they used to be 70 cents?
Well, the Australian Competition and Consumer Commission says it won’t oppose Australia Post’s proposal to increase stamp prices by 8.8 per cent.
This comes as the postal service deals with falling mail volumes and rising losses across its letters business.
Concession stamps and season greeting card stamps will remain unchanged at 60 cents and 65 cents, respectively.
That’s this week’s On the Money wrap. Prefer to listen? The On the Money podcast breaks down the latest every weekday. You can tune in here or wherever you get your podcasts.
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