03 Feb THREE ISSUES THAT WILL SHAPE THIS YEAR’S ELECTION: INFLATION, LABOUR SHORTAGES & SUPPLY CHAIN ISSUES
Welcome to the first business and media intelligence update from the Cannings team for 2022.
Now, when we left you in December, we were still coming to grips with this new-fangled Omicron variant of COVID, which threatened to turn the Christmas-New Year break into a major economic and social disaster. It didn’t quite work that way, which is encouraging, but there was still plenty of disruption, pain, and uncertainty.
And 2022 is about to get even more hectic and uncertain – it’s an election year.
As Scott Morrison and Anthony Albanese fight it out for the hearts and minds (and votes!) of Australians, here are three issues we believe will shape the campaign ahead:
Managing costs of living pressures has been a major issue in the last few election campaigns, and already, we’ve seen Prime Minister Morrison getting a few rounds in.
Recent inflation levels have smashed market expectations, with headline levels spiking to 3.5 per cent in the December quarter, and underlying inflation currently sitting on the edge of the Reserve Bank’s target band.
These inflation levels have been largely driven by global supply chain disruptions, higher petrol prices and the cost of newly constructed homes. The Reserve Bank now expects that inflation will climb to around 3.25 per cent later this year, before reducing back to 2.75 per cent in 2023.
Governor Phillip Lowe attempted to ease Australia’s concerns by stating that current levels still remain lower than other countries. The biggest challenge for politicians this election season will be tempering the nation’s frustration from the rising cost of living with the unmatched lift in wages.
JOBS, JOBS, JOBS – AND LABOUR SHORTAGES
Also on the election agenda: jobs and growth (sound familiar?). Earlier this week, the Reserve Bank forecasted unemployment to dip under four per cent this year before stabilising at around 3.75 per cent by the end of 2023 – the lowest level since the early 1970s.
It’s a big-ticket item for the Coalition which is pushing to convince voters the labour market continues to “roar back” to life.
December’s jobless rate dropped from 4.6 per cent to 4.2 per cent, marking the lowest unemployment level since 2008, prompting Governor Lowe to say that while the Omicron outbreak has impacted the economy, it has not derailed the recovery.
SUPPLY CHAIN ISSUES
Got your Christmas iPad yet? You are not alone.
The Omicron variant has added renewed stress to already stretched global supply chains.
Spiking COVID cases numbers have resulted in staff shortages across the manufacturing and logistics sectors, here and overseas. The result: bare shelves and sold-out products being the new normal. In an attempt to ease the current pressure on workforces and supply chains, restrictions have been reduced for Australian employees in transport, freight and food distribution.
However, global shipping and fuel prices still remain high and pallet shortages continue, causing a perfect storm with retailers at the heart of it.
And it’s not just chicken that’s short in supply, Aussies are finding it difficult to get their hands on everything from ammunition and bikes to the infamous Crocs shoe.
Welcome to 2022!
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