Chalmers Accused of Ignoring Inflation's True Cause

Treasury Treasurer Jim Chalmers is facing criticism for downplaying the role of government spending in fuelling inflation. This comes after Reserve Bank governor Michele Bullock pointed to 'domestic capacity pressures' as a key factor behind this year's fourth rate hike.

Chalmers denied that higher government spending was contributing to inflation, saying he had 'taken responsibility for my part of the fight against inflation' on multiple occasions. However, former Reserve Bank governor Philip Lowe disagrees with Chalmers, stating that the Federal Government should be delivering Budget surpluses at low unemployment levels.

Lowe argued that government spending has been adding to demand over time and putting upward pressure on inflation. This view is echoed by University of New South Wales economics professor Richard Holden, who accused the Government of 'gaslighting the Australian public' over its high spending.