Welcome to our July newsletter and the start of a new financial year. With winter in full
swing, it’s a great time to rug up by the fire, take stock of the year that was and make
plans for the future.
June was a big month in an eventful year for the local and global economy, with inflation
and interest rates continuing to dominate. The US Federal Reserve lifted official rates by
0.75% to a target range of 1.50-1.75% to combat surging inflation of 8.6% in the year to
May, stoking fears of a US recession.
Australia faces similar but less acute challenges. With inflation sitting at 5.1%, the Reserve
Bank lifted the cash rate by 0.5% to 0.85% in June and Governor Philip Lowe hinted
at more to come in July. The Australian economy is still growing relatively strongly at
an annual rate of 3.3%. Retail trade rose 10.4% in the year to May on the back of low
unemployment and high household savings. Household wealth rose to a record high of
$574,807 in the year to March, but since then there has been a global sell-off in shares,
a slowdown in the Australian housing market and cost of living pressures are mounting.
The ANZ-Roy Morgan consumer confidence reading remains weak at 84.7 points (100 is
Australia’s national average petrol price rose to 211.9c a litre in June, the second highest
on record, on the back of a surge in global oil prices. Brent Crude rose almost 55% over
the past year as the war in Ukraine disrupts supply. Despite a late bounce in shares, the
ASX200 fell more than 8% in the year to June, while US shares were down more than
11%. The Aussie dollar lost ground over the financial year to finish below US69c.