- Inflation rises for the first time since early 2022
- Key national and foreign figures contradict the Treasurer’s excuses
Treasurer Jim Chalmers wants us to believe that rising inflation is not his fault. The only problem with this manipulation is that it is completely false.
While inflation and interest rates are falling around the world, Australia has just recorded its first quarterly rise in inflation since early 2022, at 3.8 percent.
While the Reserve Bank is unlikely to have the courage to raise rates next week to counter the bad news, failure to do so risks making next quarter’s inflation figures only worse.
Meanwhile, the government continues to spend when and where it shouldn’t, further fueling inflation. State governments are making the same mistake.
You can bet that the spending spree will become more and more extreme as the federal election draws closer. It always does.
Then there is the impact that the July 1 tax cuts will have on inflation and rates.
They are only just beginning to take effect, meaning their impact will be seen in the next quarterly updates, also putting upward pressure on inflation that could cause it to rise again.
The Treasurer would have us believe that this is a global problem (he claimed on Wednesday that “some global pressures” are helping to fuel “sticky” inflation), but that is not the case.
Under pressure: Jim Chalmers’ excuses for Australia’s ‘sticky’ inflation crisis are crumbling
He wants us to focus on the fact that inflation is lower now than it was when Labour came to power.
But that was almost two and a half years ago, and it was immediately after the pandemic, when inflation was sky-high everywhere.
The simple fact is that inflation has fallen more substantially elsewhere than here, and is now rising in Australia when it is not elsewhere.
This is not a disaster for Australians who are already struggling during a cost of living crisis.
And the blame falls squarely on a government about to seek re-election, and in particular on a Treasurer who has failed in his duty.
The further evidence that Chalmers’ attempts to absolve himself of responsibility and claim that international factors contribute to high inflation are complete nonsense can be seen when the 3.8 per cent inflation figure is broken down into what the Australian Bureau of Statistics calls “tradables” and “non-tradables”.
These figures basically measure the price of goods from abroad compared to what happens at the national level.
These are the important facts that expose Chalmers’ excuses as rubbish.
The inflation figure we receive from abroad is just 1.5 per cent, below even the RBA’s inflation target range of 2-3 per cent.
In stark contrast, domestic inflation for non-tradable goods is a whopping 5 percent.
In other words, Australia’s rising inflation (a quarterly adjusted 3.8 percent) is a local problem.
Inflation is particularly problematic given that Albo’s top brass is flirting with the idea of taking the country to early elections.
Don’t take my word for it, said Richard Holden, PhD in Economics from Harvard and Professor of Finance at UNSW, when contacted by Daily Mail Australia:
“The CPI figures for the June quarter are worrying, but not surprising. They confirm that we have a deep-rooted, domestic inflation problem that is even worse than the official figures show, given the government’s ‘energy rebate’ manoeuvre.”
For an academic, that level of condemnation is tantamount to calling the Treasurer an economic moron, personally responsible for the problem he is trying to hide from.
And Professor Holden is right to mention the energy rebate that Chalmers included in his budget.
It was blatantly designed to put artificial downward pressure on official inflation figures, although RBA Governor Michelle Bullock says she was not fooled by the move.
The good professor is also right to point out the inaccuracy of the official Treasury inflation figures, which have been exceeded today.
The Treasurer boasted that he had lowered inflation forecasts in his budget, but here we are.
Chalmers also attacked economists who at the time suggested his budget would be inflationary.
The Treasurer now has mud on his face, that’s for sure. In fact, he’s covered in mud from head to toe.