Finder’s RBA Survey: 1 in 4 experts say supermarkets guilty of price gouging
Inflation has taken a tumble, leading all experts to agree on the case for a hold in February and a quiet 2024 for the cash rate.
In this month's Finder RBA Cash Rate Surveyâ„¢, 27 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.
All 27 experts believe the RBA will hold the cash rate at 4.35% in February.
Graham Cooke, head of consumer research at Finder, said a drop in inflation figures is welcome news for homeowners.
"For the fourth consecutive quarter, inflation has fallen. This indicates that the inflation trend is finally under control.
"As the current rate of 4.1% is still above the RBA's target of 2–3%, they will continue to monitor inflation.
"Additionally, the RBA will be keeping an eye on the impact of the changes to Stage 3 tax cuts. However, the question of when the first cut might come remains."
The vast majority of the panel (93%, 25/27) believe the cash rate has peaked, but 85% (23/27) don't think the first cut will happen until at least August.
Harry Murphy Cruise from Moody's Analytics said Australia's fight against inflation is coming along in leaps and bounds, giving the RBA some breathing room before it cuts rates later in the year.
"Progress will slow through 2024, as looming tax cuts will hand cash back to households at the exact same time the RBA is trying to take money out of the economy. That will delay Australia's first rate cut until September," Murphy Cruise said.
Saul Eslake of Corinna Economic Advisory Pty Ltd agreed, saying, "The December quarter figures were good enough to rule out whatever little prospect there was of the RBA raising rates again."
Eslake went on to say that he didn't foresee a cut at any meeting this year and compared the Stage 3 tax cuts due on 1 July to 2x 25-basis-point cuts in terms of their impact on household cash flows.
Cameron Kusher from REA Group said further hikes are unlikely given inflation has come in well below the RBA's forecast, retail sales have slowed, the unemployment rate has lifted and job creation has stalled.
"There seems to be no hard evidence to point to that suggests the RBA will lift rates," Kusher said.
1 in 3 Australians don't shop at the big 2 supermarkets
Just over 1 in 4 experts who weighed in* (28%, 5/18) say the supermarkets have been engaging in price gouging.
A further 1 in 3 panellists (33%, 6/18) said they were unsure, citing a lack of data.
Nalini Prasad from UNSW Sydney noted it was hard to measure.
"The fact that there is a duopoly tells us that supermarkets have market power that can be exploited," Prasad said.
According to Finder research, 1 in 3 Aussies do not shop at the big 2 supermarkets.
The research found 1 in 5 (19%) shop at Aldi.
A further 8% shop at Metcash, which includes retailers such as IGA and Friendly Grocer, while 7% shop elsewhere.
Cooke said diversifying your shop is the best way to get the most bang for your buck.
"Aldi's rise to 20% market share is impressive, and shows that Aussies are spreading their shopping around and trying to find the lowest prices.
"Shopping around widely will help you identify where you can get the most value for your money. Finder research found that Aldi can often be cheaper on some of the staples.
"Especially in this climate, awareness can go a long way."
Credit card balances accruing interest predicted to rise
The majority of experts (57%, 8/14) believe we will see an increase in balances accruing interest on credit cards in 2024.
Pressure from borrowers coming off fixed rates and depleted savings were cited as the main reasons for a predicted uptick in rising balances accruing interest.
According to Finder's Credit Card Report 2024, 1 in 5 (18%) credit card holders never pay their credit card balance in full.
That's equivalent to 1.9 million credit card holders who have balances accruing interest.
Cooke said credit card interest is one of the most expensive forms of debt that can drain household finances.
"It might seem like a good idea at the time, but carrying a balance on your credit card is a slippery slope to unnecessary debt.
"Paying the balance in full each month isn't always an option – whether you're paying off an emergency medical bill or a larger expense such as a car repair," Cooke said.
Peter Boehm from Pathfinder Consulting said more and more families' essential expenses are exceeding their household income.
"Whilst they may be able to fund some of these expenses via savings, not everything will be covered given high cost increases and this may lead to long term pain for short term gain (i.e. meeting immediate expenses) for many families," Boehm said.
Mark Crosby from Monash University said borrowers will face further constraints as they drop off low fixed-rate home loans which will lead to rising borrowing across non-mortgage products.
*Experts are not required to answer every question in the survey
Here's what our experts had to say:
Tomasz Wozniak, University of Melbourne (Hold): "Happy New Year! My short-term forecasts are clearly centred about the current cash rate value. My reading of these results is that the RBA will HOLD the cash rate at the current value to push the inflation down more. I expect the first interest rate cuts by mid-2024. My forecasts are available at https://forecasting-cash-rate.github.io/".
Shane Oliver, AMP (Hold): "Inflation is falling faster than the RBA expects and since the last meeting consumer spending and employment data has been weak."
Anthony Waldron, Mortgage Choice (Hold): "The latest inflation data released by the Australian Bureau of Statistics showed that the CPI rose to 4.1% in the 12 months to December. This is the smallest quarterly rise since the March 2021 quarter and should give the RBA reason to keep the cash rate on hold when it meets for its first monetary policy meeting of 2024."
Stella Huangfu, University of Sydney (Hold): "It is clear from the CPI data released today that inflation is easing in Australia. The RBA will keep the interest rate on hold for the next 2 meetings."
Sean Langcake, Oxford Economics Australia (Hold): "The Q4 data showed CPI disinflation is running ahead of the RBA's forecast, which should ensure inflation will return to target in a timeframe they deem tolerable. Inflation pressures are still relatively broad, and non tradable inflation is uncomfortably high. But we expect the RBA will be on the sidelines until the first cut in late 2024."
Cameron Kusher, REA Group (Hold): "Inflation has come in well below the RBA's forecast, retail sales have slowed and the unemployment rate has lifted and job creation has stalled. There seems to be no hard evidence to point to that suggests the RBA will lift rates."
Adj Prof Noel Whittaker, QUT (Hold): "There is evidence that rising interest rates are starting to bite and inflation is dropping. There is no reason to increase interest rates right now."
Harry Murphy Cruise, Moody's Analytics (Hold): "Australia's fight against inflation is coming along in leaps and bounds, giving the RBA some breathing room before they cut rates later in the year. But progress will slow through 2024, as looming tax cuts will hand cash back to households at the exact same time the RBA is trying to take money out of the economy. That will delay Australia's first rate cut until September."
Tom Devitt, Housing Industry Association (Hold): "The RBA will want to be very sure that inflation is safely within its target range. The last CPI data was very good but August 2024 will give them two more CPI readings, as well as more labour market, wage and retail data to really be confident as to the impact of their hiking cycle."
Nalini Prasad, UNSW Sydney (Hold): "Inflation has been easing. I think the RBA will hold interest rates constant for the time being to see what happens to inflation."
Evgenia Dechter, UNSW (Hold): "Inflation is declining, economic indicators show a slowdown in growth, and unemployment is picking up. The RBA is likely to proceed with caution and wait for more supporting statistics before it will start cutting the cash rate."
David Robertson, Bendigo Bank (Hold): "The RBA will hold rates at 4.35% in February but retain its tightening bias – however the next move will most likely be a cut around year end. Earlier cuts are possible if services inflation improves, but that will take time."
Craig Emerson, Emerson Economics Pty Ltd (Hold): "Retail sales have slumped and so has the CPI. There is no logical reason for the RBA to increase the cash rate."
Tim Nelson, Griffith University (Hold): "Inflation still running higher than target."
A/Prof Mark Melatos, University of Sydney (Hold): "Inflation remains above the RBA's target band despite moderating in recent months. House prices appear to have significantly decoupled from incomes and shrugged off the rate increases to date. As long as low unemployment (effectively full employment) persists, the cash rate is unlikely to be reduced and further increases remain a possibility."
Saul Eslake, Corinna Economic Advisory Pty Ltd (Hold): "The Dec quarter figures were good enough to rule out whatever little prospect there was of the RBA raising rates again – but not, in my opinion, good enough to warrant any expectation that they'll cut rates at that meeting, or indeed at any meeting this year (bearing in mind that the tax cuts due on 1 July are equivalent in terms of their impact on household cash flows to two 25 bp rate cuts, albeit that their distributional impact is very different)."
James Morley, University of Sydney (Hold): "Inflation is coming down as expected and retail sales were weak. So I think there is a zero chance of a rate increase at the February meeting. Any rate cut will likely wait until other central banks such as the Fed begin lowering cycles and inflation shows further progress back to the target range. This is unlikely to be until the fourth quarter at the earliest."
Mathew Tiller, LJ Hooker Group (Hold): "The latest CPI figures show that inflation is falling faster than the RBA's forecasts. This, combined with a slowly softening employment market, should signal the end of the RBA's rate-hiking cycle."
Kyle Rodda, Capital.com (Hold): "The latest CPI data shows inflation following the RBA's glide path. There's little impetus for the central bank to raise rates; it's likely the job is done."
Peter Boehm, Pathfinder Consulting (Hold): "At this stage I believe the RBA will take a wait and see approach. With so many Australian families struggling financially it would be an economic, social and political disaster if rates were increased again, notwithstanding CPI is currently above the target range. The recently announced changes to the Stage 3 tax cuts will have little impact in the short term (because they don't come into effect until July 1, assuming they pass the Senate) but it may have an impact in the second half of 2024, whereby rates may not reduce as hoped."
Dale Gillham, Wealth Within (Hold): "Whilst CPI is still above the RBA target level, it is slowly declining as such I don't think the RBA needs to place further pressure on Australian households."
Mark Crosby, Monash University (Hold): "Until inflation is at the top of the target range there is no reason to move rates currently. Don't expect any changes in 2024."
Jakob Madsen, University of Western Australia (Hold): "Still high inflation running high."
Rich Harvey, Propertybuyer (Hold): "Interest rates have peaked with inflation figures showing a meaningful decline. The RBA will be closely watching the impact of higher rates on households and small businesses to determine when they need to take their foot off the demand brake – without re-igniting inflationary concerns."
Cameron Murray, Fresh Economic Thinking (Hold): "The interest rate cycle seems to have peaked globally. Unless there is a surprise reversal in the declining rate of inflation, then I suspect the RBA and other central banks are happy to leave interest rates unchanged."
Michael Yardney, Metropole (Hold): "There is sufficient evidence that inflation is coming under control, and the RBA does not need to raise rates any further. There is a lag effect of monetary policy with interest rate changes typically taking time to fully permeate through the economy. Given this delay, the RBA should keep observing the impact of previous rate hikes before deciding on further increases. There is clear evidence that inflation is coming under control so an additional rate hike in February should be deemed unnecessary, or even counterproductive."
Stephen Koukoulas, Market Economics (Hold): "Weak growth, rising unemployment, inflation back on target."
