Treasurer Jim Chalmers has urged caution following today's higher-than-expected inflation figures, which have all but confirmed another interest rate hike next week. Speaking to reporters, Chalmers acknowledged the government's role in managing inflation but insisted that private sector demand, particularly in areas like data centers, was a larger factor. He also dismissed opposition claims that government spending was the primary driver of inflation, noting that for every five dollars of demand in the economy, only one dollar came from public spending.
The Reserve Bank of Australia (RBA) had previously forecast underlying inflation at 3.5 percent for the September quarter, but the actual result came in at 3.7 percent. Economists and markets have since increased the likelihood of a rate hike next Tuesday, with some calling it a near certainty. Another 25 basis point increase would push the rate to 4.85 percent, its highest level since 2008.
Treasury Secretary Jenny Wilkinson supported Chalmers' stance, emphasizing that private demand had been stronger than anticipated. RBA Governor Michele Bullock also highlighted weak productivity growth as a key challenge for the Australian economy, contributing to inflationary pressures. Meanwhile, Chalmers ruled out resuming the fuel excise discount, citing budget constraints and the need to avoid counterproductive cost-of-living measures.
Prime Minister Anthony Albanese acknowledged the economic difficulties but pledged to continue shielding Australians from the worst impacts. Opposition Shadow Treasurer Tim Wilson, however, criticized government spending, arguing it had made Australia vulnerable to international economic factors.