The RBA says rate rises don’t really increase living costs. But the data is clear – they very much do

RBA governor Michele Bullock last week suggested that increases in interest rates are ‘not really’ an increase in the cost of living. Photograph: Bianca de Marchi/AAP

In this year’s June quarter, the cost of living for working households rose a sharp 1.5%, driven overwhelmingly by higher mortgage payments. This is despite the Reserve Bank suggesting that interest rate rises are “not really” an increase in the cost of living.

Economics and finance are purposefully confusing. Those in the know are pretty happy for you to be ignorant so they can carry on their operation without much fuss. The RBA and a few economists have been rather bemused by the results of an RBA survey showing that 25% of respondents “assessed correctly that higher interest rates would ultimately lead to lower inflation, while more than half indicated that higher interest rates would lead to higher inflation”.