Australia’s falling inflation rate didn’t stop Karl Stefanovic from letting fly with brutal questions for Treasurer Jim Chalmers as the country battles a cost-of-living surge.
According to official data, inflation dropped from more than 7 per cent to 5.6 per cent in May, but mortgage repayments, rents, electricity bills and grocery prices remain sky high.
‘The Government yesterday seemed to be in the mood for celebration,’ the Today show host said.
‘Are you actually hearing the hurt from everyday Australians, or have some of your government gone tone deaf?’
The combative opening question caused Dr Chalmers to pause for a moment before responding that ‘of course’ the government is aware people are ‘doing it tough’.
‘Global pressures are slowing our economy. It is important to remember that inflation is moderating and we have record numbers in employment.’
‘That’s put us in better stead for the difficult months ahead.’
But Stefanovic didn’t let up, hammering the Treasurer with a follow-up question.
‘I keep hearing the government say this, but the reality is food, power and housing is causing grief across the length and the breadth of the country,’ Stefanovic said.
‘Even your childcare subsidies will be swallowed up by inflation.’
‘People are losing faith in the government’s ability to handle this crisis. Have you got this?’
Dr Chalmers replied that his government was on top of the situation.
‘This inflation challenge is hanging around longer than we would like.’
‘What we’ve tried to do is take responsibility in the budget to provide this cost-of- living help for Australians at the same time as we invest in the future of their economy.’
‘That’s why next week, at the beginning of July, there will be cheaper child care for Australians there will be electricity bill relief.’
Stefanovic argued: ‘We lose that electricity bill relief with inflation.’
‘This (budget welfare measures) is all a feast for the Reserve Bank that seems intent on bringing pain to Aussie households.’
Dr Chalmers said it was ‘very clear’ inflation was not being caused by people on low wages being paid more.
‘The Reserve Bank, obviously, they’ll make a big call (about raising the cash rate again) on Tuesday.’
‘I have my own job to do providing this cost-of-living help, investing in the future of the economy and investing this surplus to build our buffers and resilience as we enter what will be a pretty difficult period in the global economy.’
The Reserve Bank will be watching retail trade data on Thursday for more evidence of a slowing economy before making a decision on further rate rises.
Stefanovic said childcare and electricity bill subsidies would be ‘swallowed up’ by inflation
Economists have pencilled in a 0.1 per cent month-on-month rise when the Australian Bureau of Statistics (ABS) releases its monthly retail sales data along with quarterly retail volumes.
Consumers have proved relatively resilient to economic challenges, but Australian Retailers Association chief executive Paul Zahra said the slowdown was well underway, especially for non-essentials.
‘Obviously we need to eat, so food is still continuing to perform quite well,’ he told AAP.
Surveying by the organisation suggests there will be 400,000 fewer people shopping during the end-of-financial year sales than normal.
Mr Zahra said retailers were discounting by more than usual during the period to stimulate sales.
A separate consumer survey by Manhattan Associates found a third of respondents were holding off or deferring purchases until sales or special deals, while 51 per cent said they had decided to hold off indefinitely.
Mr Zahra said retailers were facing a perfect storm, including lower demand, high costs of doing business, a retail crime wave and a robust reform agenda from the government.
‘There’s a collision between this cost-of-living crisis that we’re seeing with the cost-of-doing-business crisis,’ he said.
The ABS is also due to release job vacancy data on Thursday.
The Reserve Bank board will meet for the next interest rate decision on Tuesday, with CommSec economists saying the possibility of a further 25 basis point rate hike is ‘finely balanced’.