Australians should be bracing themselves for some belt tightening' if they have not already done so' in light of further interest rate rises on the horizon.
That's according to CQUniversity financial planning academic Dr Angelique McInnes' who said interest rates will continue to increase over the next few years until inflation returns to an acceptable position.
"With inflation increasing to 5.1 per cent in the quarter ending March 2022' which was more than expected' the Reserve Bank of Australia's Board increased the cash rate from 0.1 per cent to 0.35 per cent on 3 May 2022' an increase of 25 basis points'" Dr McInnes said.
"This change in monetary policy is to start increasing the cash rate over the next two to three years to return inflation back to the two to three per cent target'" she explained.
"However' this does mean that people with mortgages and loans will be paying more to service their loans' thus adding pressure to their weekly budgets to make ends meet."
Dr Mcinnes said that Australians have and continue to face a series of disruptive events' making it necessary for the Australian Government and the Reserve Bank to step in.
"As Australians try to normalise their lifestyles during the disruptive global events of the COVID-19 pandemic' the Ukrainian-Russian war' subsequent energy crisis' disruption to supply chains' rises in inflation' and climate change' it is clear the Australian economy needs to be carefully managed by the Government and Reserve Bank to minimise the impact on economically vulnerable Australians."
She said on a more positive note for job seekers' unemployment in Australia is forecast to drop further.
"The unemployment rate is forecasted to reduce to 3.5 per cent by the end of 2023' its lowest level in 50 years."
Employers on the other hand will continue to struggle to find suitably qualified staff and this will potentially put pressure on wages to rise.
"With demand for recruits to fill job vacancies' wage rates will be under pressure to rise' which will have spillover effects of putting further pressure on inflation' thus requiring the Reserve Bank to support the economy with further cash rate rises' making credit expensive and so hitting the back pocket of Australians."
"It is my prediction that we will see further cost of living type payments and tax relief from the Government over the next year or two."