Dozens of NSW councils raise their rates in response to inflation

Dozens of NSW councils will hike up their rates in what is yet another blow to residents already struggling with the rising cost of living.

Across the state 86 councils have been approved to lift rates above the annual rate peg in response to soaring inflation.

The rate peg is the maximum amount councils can increase rates by and is set by the Independent Pricing and Regulatory Tribunal (IPART).

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To lift rates further each council had to apply to IPART and get the new figure approved as part of a special process.

"The latest rate peg was determined in the low inflation environment at the beginning of the COVID-19 pandemic. Since then, high inflation and global uncertainty increased councils' costs," Tribunal member Deborah Cope said.

"Some councils have demonstrated that without additional funds they will not be able to deliver the projects they have already consulted on and included in their budgets."

The rate increases are between 1.6 and 2.5 per cent, and do not apply to every council in the state.

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"We were careful to balance the need of councils to maintain the services and investment they had already committed to against the need to keep rates affordable for the community," Cope said.

IPART said it is reviewing the process of setting the annual rate peg to deal with what it described as a volatile and fast-changing economic climate.

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The increase comes after the Reserve Bank of Australia (RBA) hiked interest rates up for the second time in as many months.

Earlier this month it raised the cash rate target by a larger than expected 50 basis points to 0.85 per cent.

It was the largest monthly rate hike since February 2000 and took rates to higher than they were prior to the start of the COVID-19 pandemic.

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