Australia Briefing: RBA Warns On Migration

Good morning everyone, it’s Ben here in a chilly Canberra. Here’s what’s making news this morning.

Today’s must-reads:
• Retail sales up on food prices
• Green light to open huge gas field
• Australia’s budget deficit to grow

Worker influx. Australia’s population is growing fast following the easing of the Covid-19 pandemic, with net migration expected to rise to a record 400,000 this fiscal year. But the RBA has warned the boom could have “unanticipated or more pervasive effects,” including higher demand for housing, higher rents and lower unemployment — none of which will help with Australia’s cost-of-living crisis.

Budget blues. With less than a week until Australia’s 2023 budget is handed down in Canberra, Deloitte is forecasting it will show a worsening long-term structural deficit. While a boom in revenue from high commodity prices and low unemployment will slash the deficit to a sliver this financial year, spending demands will see that gap grow in the years ahead, according to Deloitte.

Spending less. Australian retail sales rose for a third straight month in March, driven primarily by food inflation, with every other spending category reporting a decline. Sales jumped by 0.4%, double economists’ expectations, but indicated households are beginning to reduce spending under the weight of the RBA’s aggressive interest-rate increases.