The government and opposition will choose what suits their political narratives based on the latest monthly inflation data released this morning.
The headline inflation rate rose slightly on Wednesday, from 2.1 percent to 2.3 percent. It’s not a huge increase, but it is an increase nonetheless.
It was a good reminder of why politicians should not get ahead of themselves, which is exactly what the Prime Minister did on morning television just hours before the new inflation figures were published.
He told ABC News Breakfast that inflation is “now a couple ahead and falling”. The first part is still accurate, but not the last.
No wonder some within Labor circles are uneasy about how the Prime Minister will perform once this year’s formal election campaign begins.
Inflation simply went up – not what Labor wanted to hear as the countdown to the election approaches.
You really have to wonder how a politician with as much experience as Albo manages to put himself in his mouth so many times.
Yesterday he went to great lengths to offend anyone who uses huts to beat the sun on beaches, today he declares victory by stating that inflation is falling just hours before it rises.
Sometimes saying less is more.
In Albo’s case, he should avoid details because he does not always get the data right.
Today was what’s happening with headline inflation… Remember the last federal election campaign back in 2022, when it blew up the cash rate on day one?
No wonder some within Labor circles are uneasy about how the Prime Minister will perform once this year’s formal election campaign begins.
That said, a key figure – ‘trimmed average inflation’ – fell today, from 3.5 percent to 3.2 percent.
What is the trimmed average inflation figure? It is the result of inflation minus faster and slower changes in prices.
It is designed to give us a better idea of where the actual cost of living results lie, eliminating one-off changes that can distort the overall figure. Think floods, wildfires and government subsidies.
The fact that the trimmed average is higher than the headline figure is why the Reserve Bank has been unwilling to cut rates in recent months.
Its inflation target band is between 2 and 3 percent. The headline figure is there, but not the trimmed average.
This is because Labor has been using energy rebates to artificially reduce the headline figure as part of its argument for a rate cut before the election.
The RBA is having none of that.
No wonder some within Labor circles are uneasy about how the Prime Minister will perform once this year’s formal election campaign begins, writes political editor Peter van Onselen.
But look how today and in the coming days the Treasurer and those around him are starting to extol the virtues of reducing the average figure, even though in the past they only wanted to focus on the headline rate because it is lower!
Now that the headline interest rate has risen marginally, making the Prime Minister’s comment just hours earlier “falling”, Labor will not want that figure to be looked at.
What does all this mean for the elections? There remains a reasonable chance that the RBA will cut rates in February at its next meeting, but probably not.
Most economists are convinced that even if he doesn’t lower rates then, he will do so when he meets in April, if not the month before, in March.
No wonder speculation is now rife that Albo will call the election for April 12, after WA voters go to the polls for their state election.
Doing so would give him a rate cut just before Election Day, in the final days of the campaign.
While such a cut would say more about the weakening of the Australian economy than Labor’s inflation-fighting powers, the prime minister will take what he can get.
It would also get him to the polls before he has to present a nasty budget, laden with debt, an explosion of deficits and spending.
None of which is a good thing when it comes to convincing voters that you are the best party to run the economy.