Reserve Bank chief slammed for suggesting Aussies getting haircuts are to blame for inflation

New Reserve Bank governor Michele Bullock has been criticized for suggesting Australians’ haircuts were to blame for high inflation.

While inflation remains high at 5.4 per cent, Ms Bullock said domestic demand for services was now the main driver of rising prices.

“Inflation is driven by domestic demand because it is increasingly supported by services,” she told a dinner of Australian business economists in Sydney on Wednesday.

“Hairdressers and dentists, restaurants, sports and other recreational activities: the prices of all these services are increasing sharply. »

Tony Windsor, a former independent MP in Federal Parliament, joked that bald men like him were leading the fight against inflation.

“Break… the balds to lead the fight against inflation,” he told his X subscribers on Thursday morning.

One follower joked that those without much hair on top could avoid paying tax on their company car.

“It’s also a good way to avoid fringe benefit tax,” he said.

Mr Windsor, who previously held the New England seat in northern NSW, joked that banks could reward bald customers for helping to keep inflation low .

“You will qualify for lower mortgage rates,” he said.

Ms Bullock said high inflation was now a problem beyond soaring petrol and electricity prices.

“Inflation therefore goes well beyond the simple increase in the prices of gasoline, electricity and rents: prices are increasing sharply for the majority of goods and services that we all consume,” he said. she declared.

The Reserve Bank of Australia this month raised interest rates for the 13th time in 18 months, taking the cash rate to a 12-year high of 4.35 per cent.

Inflation is now expected to take longer to moderate, with the RBA forecasting a return to the peak of the 2-3% target at the end of 2025 instead of mid-2025, as predicted last August.

Spending on services, classified as leisure and culture, rose 5.6 per cent in the year to September, according to Australian Bureau of Statistics Consumer Price Index data.

Spending data from Commonwealth Bank’s 10 million customer accounts confirmed the RBA’s observation, with older baby boomers and younger millennials shelling out more for services.

Baby boomers, or those aged 65 and older, spent 17 percent more on travel and 11 percent more on dining out, with their overall spending increasing 6 percent.

Millennials spent 13 percent more on entertainment, even though their overall spending fell 5.1 percent, including a 3.7 percent drop on everyday essentials.

The most severe interest rate increases since 1989 have harmful economic consequences.

Credit checking company Experian also revealed that two-thirds of loan servicers surveyed had already seen an increased risk of consumer defaults and hardship over the past six months.

Borrowers who took out a loan since 2019 are also three times more likely to default than those who took out a mortgage in 2015.