The worst of the inflation crisis is behind us, says a group of leading CEOs. But they warn the path to regaining the nation’s prosperity still contains bumps.
Leaders from companies across a range of sectors, including manufacturing, retail and finance, are urging the Reserve Bank and the government to stay the course on getting inflation down over the next 12 months, The Australian is reporting.
The Australian Bureau of Statistics (ABS) is set to release its monthly inflation numbers tomorrow, but they are expected to show that the CPI (Consumer Price Index) for the 12 months to July is 5.1 per cent, down from 5.4 per cent in the 12 months to June.
Despite the general optimism, financial markets are anticipating at least one more interest rate hike before the RBA is done with its aggressive monetary tightening cycle, which has seen a total of 400 basis points added since May 2022. The concern is that interest rates could rise ‘too high’, leading to a hard landing for the economy.
Chris Ashton, CEO of chemical producer Worley, says he believes the worst of the inflation spike may be over. However, he emphasised the importance of taking continued steps to keep the situation under control.
“I think we’ve peaked,” he says. “From an inflationary point of view, the impact of the interest rate rises from some of the central banks has had the desired effect and we’re starting to see indicators of inflation slowing down.
“It’s going to be important for Australia to get its inflation under control – as it’s doing now with some of the actions the Treasurer has taken, or the ones taken by the federal bank.”
He says interest rates are not expected to be cut until the end of next year and inflation is not expected to return to the RBA’s target band of 2-3 per cent until 2025, but that a recovery is achievable.
Elliot Rusanow, CEO of shopping centre managers Scentre, says the RBA is on the right track but he is concerned it may be too heavy handed with the interest rate rises, resulting in “a heavy landing” for the economy.
“The narrow path that the Reserve Bank is trying to achieve feels like it’s actually being achieved,” he said.
“Our hope and expectations would be that their settings would allow this narrow path to actually occur.
“The risks would be if that narrow path is hampered in any way by being too restrictive. We think that the interest cycle is either at or very close to being at the end of this tightening range and we can navigate through this narrow path.”
Leah Weckert, CEO of supermarket giant Coles, says she believes a focus on improving productivity is key to the economic recovery, rather than any specific monetary policy from the RBA.
“It [productivity] is something that we’re very focused on as a business; that we are seeking to improve productivity in our business.
“We’re also focused on what I describe as more old-fashioned productivity in training for our team, to help all our team members be more efficient and effective at their jobs to drive productivity outcomes.”
It’s no surprise the head of Coles would be pushing for more productivity. The company recently posted a $1.1 billion profit for 2022-23, a 4.8 per cent increase over the previous year, but one that was viewed as disappointing.
Will pushing some of the nation’s most over-worked employees to do even more really bring inflation and consumer prices down? That remains to be seen. However, it seems top executives remain cautiously optimistic about the nation’s economic challenges.
The upcoming inflation numbers and any further changes in interest rates will have a significant impact on our economic trajectory in the next 12 months, so stay tuned.
Are you seeing any signs of inflation slowing? Will the economy recover any time soon? Let us know what you think in the comments section below.
Also read: Why high interest rates are not bad news for everyone
