Double Whammy Hits Aussie Mortgage Holders

Australia's mortgage holders are facing a double whammy as the Reserve Bank of Australia (RBA) increases interest rates and fuel costs rise due to global oil price hikes.

The RBA raised its cash rate by another 25 basis points to 4.60 per cent, its highest level since 2011, in an effort to combat inflation. However, with the Australian Bureau of Statistics (ABS) set to release the latest inflation figures on Wednesday, markets are expecting a possible increase in annual headline inflation.

Commonwealth Bank senior economist Trent Saunders expects this rise to be from 3.5 to 4.0 per cent, largely due to higher oil prices. Corinna Economic Advisory chief economist Saul Eslake notes that while the RBA can 'look through' high oil prices on their own, they now face a problem of both domestic and international inflationary pressure.

Eslake warns that businesses will start to pass on higher costs to consumers, leading to a broader range of goods and services being affected by price increases. This, in turn, will put further upward pressure on interest rates.