Jim Chalmers says Labor ‘not getting carried away’ over latest inflation numbers
Treasurer Jim Chalmers isn’t getting “too carried away” by the latest inflation figures, which showed inflation was moderating faster than expected.
The October figures, released by the ABS on Wednesday, showed inflation fell from 5.6 to 4.9 per cent – lower than predicted – but still above the Reserve Bank’s target of two to three per cent.
Mr Chalmers said the latest figures were a “very welcome moderation” but the fight against inflation was still ongoing.
“We don’t get carried away by the monthly figures because we understand that inflation is still too high and those numbers bounce around a bit,” he told ABC Radio.
“But it remains the case that what we saw yesterday was a very substantial and a very welcome moderation in inflation.”
Shadow treasurer Angus Taylor, however, said Australia was at the “back of the pack” in the global fight against inflation.
“It’s hardly a major victory when your target is two to three per cent. We’ve got a long way to go,” he said.
Inflation figures aside, the OECD has updated its projections for Australia’s economic activity. GDP tipped to slow from 1.9 per cent in 2023 to 1.4 per cent in 2024 before recovering and expanding in 2025.
The think tank, headed up by former finance minister Mathias Cormann, predicted interest rates have now peaked at 4.35 per cent and cuts will begin in the second half of 2024.
In its report, the OECD said it expects inflation to return to the target band by early 2025.
Mr Chalmers said there was still a “lot of uncertainty” when it came to the global economy, and while a soft landing was now assumed, it was still not assured.
“There’s a lot of uncertainty in China. Around the world. We’ve got two conflicts, one in the Middle East, one in Europe,” he said.
“We’ve got uncertainty at home when it comes to the way that these interest rate rises are biting in our economy.
“So there’s still a lot of uncertainty, the assurance I give... is that we will always carefully calibrate our economic policy and our budget strategy to make sure that we can deliver for people in a way that recognises that inflation is still the defining challenge in our economy, and that’s why it’s pleasing and encouraging to see the ABS and Deloitte and the OECD and others saying that our policies are helping.”
Pressed on whether contentious stage three tax cuts – legislated by the former Coalition government and supported by Labor – risked exacerbating inflation, Mr Chalmers said the risk was minimal.
“They have been factored into the baseline of the Reserve Bank’s inflation forecasts, indeed the Treasury’s inflation forecast,” he said.
Mr Chalmers said while the government understood Australians wanted Labor to change its position on the tax cuts, they would not.
“One of the reasons they’d like us to do that is because they want to make sure that we’re helping people on lower middle incomes as well and we are,” he said.
Mr Taylor said Labor should not reneg on the tax cuts.
“I don’t think taxes are the right lever to pull here,” he said.
Originally published as Jim Chalmers says Labor ‘not getting carried away’ over latest inflation numbers
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