The soaring cost of living could bring a cash boost for pensioners and the unemployed with big rises now expected in September.
Fortnightly welfare and pension payments including Jobseeker and Youth Allowance are linked to inflation with new official consumer price index due for release on July 27.
Headline inflation in the year to March surged by 5.1 per cent – the fastest pace in two decades – but the ANZ bank is expecting the consumer price index (CPI) for June to surge by 6.3 per cent.
This would be the steepest increase since 1990.
Welfare payments are indexed to the CPI twice a year, in March and September, to reflect the most recent CPI increase, which includes surging petrol prices.
So a 6.3 per cent inflation rate, could see the $900.80 age pension rise by $56.75 a fortnight, on top of the $20.20 rise six months ago.
The rising cost of living is also set to push the fortnightly Jobseeker payments of $642.70 up by a possible $40.49, while Youth Allowance payments of $313.80 could go up by $19.77.
The soaring cost of living could bring a cash boost for those on pensions and Centrelink with big rises now expected
Fortnightly welfare and pension payments including Jobseeker and Youth Allowance are linked to the inflation rate-based Consumer Price Index (CPI) and will be going up in September
Even if the inflation comes in at a lower rate of 2.8 per cent, it will still push up pensions by $25.20 a fortnight, Jobseeker by $18.20 and Youth Allowance by $8.90.
The final figure will be decided when the payments are re-assessed in relation to the cost of living, based on the price of food, fuel, power bills and other vital items.
ANZ is expecting Australian Bureau of Statistics data, due out on July 27, will show underlying inflation – excluding high petrol prices – running at an annual pace of 4.8 per cent.
This is well above the Reserve Bank’s 2 to 3 per cent target and would mark a big jump from 3.7 per cent in the March quarter.
ANZ is expecting an annual headline inflation rate of 6.3 per cent for June, which would be the steepest increase since 1990, with petrol back above $2 a litre despite a six-month halving of fuel excise.
This would mark a big jump from the March quarter’s annual headline inflation rate of 5.1 per cent – itself the highest since 2001.
This number, also known as the consumer price index, includes big price increase like petrol and vegetables.
The spiralling inflation rate saw pensions get their biggest boost in nine years when the consumer price index-linked increase pushed them up $20.20, but the next rise could even overshadow that.
‘We are certainly looking forward to the increase, particularly as so many of the things most impacted by inflation are basic goods,’ Council on the Ageing chief executive Ian Yates told the Daily Telegraph.
‘Given indexation is six-monthly, it can mean pensioners get squeezed pretty badly [by rising inflation].’
The boost will come as Anthony Albanese’s government considers subsidising the price of electricity as Australians face soaring power costs due to an energy crisis.
The Labor government is discussing measures to alleviate pressure on households as power prices skyrocket due to a gas shortage, outages at coal-fired power stations, and a cold snap.
Experts have predicted fuel bills could even double in the current crisis.
With Europe also gripped by soaring costs after Russia’s invasion of Ukraine, the British Government announced it would give all homes a one-off $690 (£400) power bill credit in October.
With the CPI tipped to hit up to 4.8 per cent in the June quarter, the $900.80 age pension could rise by $43.80 a fortnight, on top of the $20.20 rise six months ago
Anthony Albanese (centre) is considering subsidising electricity bills as Australians face soaring power costs due to an energy crisis
Comparison site Finder warned electricity prices could double
The new Labor government will hand down its first budget in October, with Treasurer Jim Chalmers already considering cost of living relief measures.
States and territories have varying levels of power bill subsidies in place already.
Victorian households get a $250 cash handout for simply signing up to the Energy Compare website while NSW households with dependent children can get a $180 discount.
In the year to March, wholesale electricity prices soared by 141 per cent.
States and territories have varying levels of power bill subsidies in place already
Australia’s economy grew by 0.8 per cent in the March quarter, a big drop from 3.6 per cent in the final three months of 2021 following the end of lockdowns in Sydney and Melbourne.
But wages are growing by just 2.4 per cent – less than half the headline inflation rate of 5.1 per cent, Australian Bureau of Statistics data showed.
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