Did we really need the latest interest rate increase?

Economic indicators are made up of past readings and now readings. If the CEO of Woolworths knows anything about Australian consumers, the interest rate rise from the RBA, which was piled in by the banks, might have been unnecessary.

It’s worthwhile reminding you that four out of the nine board members of the central bank’s interest rate setting group thought we didn’t need a rise now.

Before we look at what Woolies’ boss Amanda Bardwell is seeing from her cash-strapped customers, it’s important to point out that we copped an interest rate rise in February and now March. On top of that, the 50 cents a litre rise in petrol prices because of this Iran war has been compared to three rate rises, in terms of the slug on a consumer who drives a car.

So, since the beginning of 2026, car driving mortgagees with big loans have been taken to the cleaners by the RBA and petrol companies. This is bound to really hit the demand-side of inflation. However, the combined effect of rate rises, and petrol price hikes will add to cost push inflation.

That means, the RBA might be a short-term contributor to the inflation rise it’s trying to beat down! This is just another reason why economics is called “the dismal science”.

Now let’s look at what Amanda Bardwell is seeing at her stores because it could be a ‘now’ reading the RBA might take on board before it considers another rise in May.

This is what the supermarket chief and others are seeing:

1. Consumer sentiment is crashing.

2. It’s falling at double the rate normally seen at this time of year.

3. She expects it will get worse.

4. Suppliers such as farmers, who are dependent on fuel, are raising prices. That group includes tradies.

5. Bardwell thinks this week’s rate rise will worsen what she’s seeing in her supermarkets.

The Australian’s team at the newspaper’s Global Food Forum in Sydney on Wednesday reported what Jane Hrdlicka, chief of Dan Murphy’s and BWS, has observed from her vantage point: “What I expect will happen is during this period of uncertainty with fuel, people will hunker down a little bit and be uncertain about what to do – and there will be less spending as a consequence,” she said.

This CEO expected customers to dine out less and potentially moderate alcohol consumption as they juggled higher mortgage payments.

As a response to surging petrol prices, the Prime Minister has called a snap national cabinet for today to appoint “a supply chain tsar” to

oversee food and fuel distribution.

This is a national emergency. Given what people in the real world such as the CEOs of Woolworths and the likes of Dan Murphy’s are seeing about consumers, one wonders if the people in the not-so-real-world (like those at the RBA) should have talked to these smart people before they reached for the interest rate handle.

I always remember Gerry Harvey telling me that Treasury people used to talk to him before major events such as budgets. I asked him what they were like? Gerry said: “They were nice young blokes, but I don’t think they knew much about retail.”