Inflation is worse than expected, says Treasurer Jim Chalmers

Treasurer Jim Chalmers has defended the government’s record on fighting inflation while admitting that the trend of rising prices “is more persistent than we’d like, here and overseas.”

Treasurer Jim Chalmers has defended the government’s record on fighting inflation while admitting that the trend of rising prices “is more persistent than we’d like, here and overseas.”

Dr Chalmers made the remarks to the Economic and Social Outlook Conference in Melbourne, where he also called on government and industry to work more closely together to hit the nation’s 2050 net zero target.

According to the Treasurer, high oil prices were a significant contributor to the most recent set of inflation numbers.”

“In particular, global oil prices have remained higher than Treasury had expected since the end of the September quarter.”

“Combined with the escalating conflict in the Middle East, this means that inflation is likely to be more volatile in the near term.”

Last week’s inflation figures showed consumer prices rose 1.2 per cent from July to September, slightly higher than the 1.1 per cent expected by economists.

Key drivers of the higher than expected figures, which have put the pressure on the Reserve Bank to once again raise rates when it meets again next Tuesday, included housing and transport costs.

Federal Treasurer Jim Chalmers speaks at the Economic and Social Outlook Conference at Crown. Picture: NCA NewsWire / Andrew Henshaw

However, the government has pointed to various cost of living relief packages saying that without them inflation would be even higher.

Dr Chalmers also made a further pitch for the government’s 2050 net zero target, saying as much as $225 billion would have to be spent to achieve the goal.

“It’s important for me to acknowledge that without more decisive action, across all levels of government, working with investors, industry and communities, the energy transition could fall short of what the country needs,” Dr Chalmers said.

“Put simply, to meet our potential – to maximise our advantages in renewable energy and the economic and industrial opportunities that will come from them – we need to get more projects off the ground, faster.”

Australia has a target to reduce its local greenhouse gas emissions by 43 per cent on 2005 levels by the end of the decade, with an aim to reach net zero by 2050.

All eyes will be on the RBA on Melbourne Cup day. Picture: NCA NewsWIRE / Monique Harmer

The remarks came a day after the International Monetary Fund warned that the nation’s interest rates would have to rise further to bring inflation under control, warning that government infrastructure spending was also putting upward pressure on prices and supply chains.

“The Commonwealth government and state and territory governments should implement public investment projects at a more measured and co-ordinated pace, given supply constraints, to alleviate inflationary pressures and support the RBA’s disinflation efforts.”

“Otherwise, interest rates would have to be even higher, putting the burden of adjustment disproportionately on mortgage holders,” it warned in a statement.

However on Wednesday Prime Minister Anthony Albanese claimed that his government was fighting inflation by “(not) spraying money around in search of a headline as our predecessors so often did” which “would make the problem of inflation worse, not better.”