Jim Chalmers: Latest numbers a good sign but inflation still ’a bit too sticky‘ to get ‘carried away’

Treasurer Jim Chalmers has admitted that cost-of-living pressures have ‘far’ from disappeared, despite describing the latest inflation figures as ‘pretty encouraging’.

Treasurer Jim Chalmers has admitted cost-of-living pressures have “far” from disappeared despite describing the latest inflation figures as “pretty encouraging”.

While the numbers released this week had made it clear the Budget was “taking some of the sting” out of rent, childcare and electricity, there was “still pressure there”, Mr Chalmers said.

Headline inflation increased by a full percentage point in the June quarter, taking the annual rate of inflation to 3.8 per cent from 3.6 per cent.

However, there was a decline in the “trimmed mean” CPI — the figure Reserve Bank of Australia (RBA) Governor Michele Bullock is most concerned about when setting monetary policy.

The trimmed mean, which strips out the biggest price movements to focus on core inflation, fell to 3.9 per cent from 4 per cent, defying economists’ predictions that it would go up.

Finance Minister Katy Gallagher and Federal Treasurer Jim Chalmers. Picture: Martin Ollman

While not pre-empting whether the RBA would hike or hold rates when it meets on Tuesday, Mr Chalmers said the latest numbers were a good sign, although declaring inflation was still “a bit too sticky” and “a bit too stubborn” for the government to get “carried away”.

“We’ll know Tuesday afternoon where they (the RBA) landed and why. I’m respectful of them and I don’t make predictions about it or try and pre-empt or position them,” he said.

“There were some encouraging numbers out on Wednesday and we’ve made some big progress since the election, but I acknowledge inflation’s still a bit too sticky and a bit too stubborn, and that’s why we didn’t get too carried away when they came out.

“Even with those pretty encouraging numbers, we know cost-of-living pressures haven’t suddenly disappeared, far from it.

“That’s why we’re so focused on rolling out cost-of-living relief right now. It’s big enough to make a difference to people’s budgets but responsible enough not to make the inflation problem worse.”

Mr Chalmers says the government knows that cost-of-living pressures haven’t suddenly disappeared. Picture: Max Mason-Hubers

Whatever the RBA decides on Tuesday, relief appears in sight before the end of the year, with markets predicting an 80 per cent chance of a rate cut by November.

Mr Chalmers claimed the government had kept inflation lower than what it might have been by striking the right balance with cost-of-living relief.

Underlying inflation had come down again for the sixth consecutive time while monthly inflation had also gone down, he said.

Home grown inflation had halved in the quarter, all of which were “good developments”, Mr Chalmers said.

But it was how people were faring that mattered most, he said: “Our job in all of this is to help in the fight against inflation and get the budget in better nick without smashing jobs or putting even more pressure on people doing it hard enough already. The economy is soft, people are under the pump, and these are the pressures we are responding to with our cost-of-living help.”

Got a news tip? Email [e-mail]