Treasurer Jim Chalmers delivers grim news on inflation from G20 meeting

Jim Chalmers has shared a sobering outlook ahead of the next budget as global economies struggle with a shared common enemy.

Treasurer Jim Chalmers has doubled down on remarks this week that a tough budget is on its way after a meeting with global leaders forecast a challenging period ahead.

Emerging from a meeting with G20 finance ministers and central bank chiefs in Washington, Dr Chalmers told Australians to brace for some difficult decisions ahead of his first budget on October 25.

“Public enemy No.1 is this inflation we’re all facing,” Mr Chalmers told the Today show on Friday morning.

Jim Chalmers met with international economic ministers and central bank governors this week. Picture: Supplied

“It’s come from a range of places but particularly the war in Ukraine, so we’ve got to do what we can.”

“For governments, the most important thing we can do is hand down responsible budgets.”

The US Labor Department has revealed that US consumer prices rose 8.2 per cent over the year to September and core inflation rose by 6.6 per cent – the highest increase since 1982.

This led Federal Reserve chairman Jerome Powell to hike US interest rates.

Mr Chalmers met with Federal Reserve chair Jerome Powell. Picture: Supplied

Dr Chalmers said he wanted to be upfront with the Australian people about the challenging economic times the nation was heading into.

“I think there’s no use beating around the bush,” he told the Today show.

“I would rather level with people about the challenges we’re going through, but I also say to people we will get through this.

“I am personally optimistic about the future of our economy and the future of our people and the future of our country, but first we need to navigate what will be some pretty tricky terrain.”

The Treasurer said middle-to-high income earners could rest easy knowing the government was planning to keep the stage 3 tax cuts in the budget despite the nation’s financial woes.

The October budget will include the stage 3 tax cuts. Picture: NCA NewsWire / Gary Ramage

Earlier this week, the Treasurer warned that the upcoming federal budget would be written on the “backdrop” of a deteriorating global situation.

“The world is bracing for another global downturn. That’s the truth of it,” he said.

“The prospects for a recession in some of the major economies of the world has edged over from possible to probable and that has obvious implications for us as well.”

Mr Chalmers said the nation was in a strong position to enter the downturn, and while the budget would not forecast a recession for Australia, we would not escape unscathed.

The Treasurer said the budget would be designed to address a “blunt and brutal” economic landscape and would focus on three factors: inflation, the world economy and spending pressures.

“It won’t be fancy. It won’t be flashy. It will be responsible. It will be solid,” he said.

Mr Chalmers will meet with US President Joe Biden’s economic advisers on Friday (Saturday AEDT).