PETER VAN ONSELEN: Jim Chalmers’ excuses for Australia’s inflation crisis spectacularly unravel – with two key stats easily blowing apart the garbage Treasurer is peddling

Treasurer Jim Chalmers wants you to believe that rising inflation isn’t his fault. The only problem with such spin is that it’s utterly false.

While inflation and interest rates around the world are falling, Australia has just recorded the first rise in quarterly inflation since early 2022, at 3.8 per cent. 

While the Reserve Bank probably won’t have the courage to put rates up next week to counter the bad news, not doing so risks the next quarterly inflation numbers only getting worse.

Meanwhile, the government continues to spend when and where it shouldn’t, further stoking inflation. State governments are making the same mistake.

You can bet that the spend-a-thon will only get more extreme as we count down to a Federal election. It always does.

Then you need to consider the impact that the July 1 tax cuts will have on inflation and rates. 

They are only just starting to take effect, meaning that their impact will be seen in the coming quarterly updates – also putting upward pressure on inflation such that we may see it rise again.

The Treasurer wants you to believe this is a global problem – claiming on Wednesday that ‘some global pressures’ are helping fuel ‘sticky’ inflation – but it’s just not. 

He wants you to focus on the fact inflation is lower now than when Labor came to power.

But that was nearly two-and-a-half years ago now, and it was in the immediate wake of the pandemic, when inflation was sky high everywhere.

The simple fact is that inflation has come down more substantially elsewhere than here, and now it’s rising in Australia when it isn’t rising elsewhere.

This is nothing sort of a disaster for Australians already doing it tough during a cost of living crisis. 

And the blame rests firmly at the feet of a government about to seek re-election. Specifically at the feet of a Treasurer failing in his duty.

The biggest giveaway that Chalmers’ attempts to absolve himself of responsibility and claim international factors are contributing to high inflation is utter rubbish can be seen when the inflation figure of 3.8 per cent is broken down into what the Australian Bureau of Statistics terms ‘tradeables’ and ‘non-tradeables’. 

Those figures essentially measure the price of goods from overseas compared to what’s happening domestically.

This is the important data that exposes Chalmers’ excuses as garbage.

The inflation figure for what we get from overseas is just 1.5 per cent, below even the RBA’s inflation target range of 2-3 per cent.

In sharp contrast the domestic ‘non-tradeables’ inflation number is a whopping 5 per cent.

In other words Australia’s rising inflation – a quarterly adjusted figure of 3.8 per cent – is a homegrown problem.

Inflation is particularly problematic given Albo’s high command are flirting with the idea of taking the country to an early election 

Don’t take my word for it, this is the way Richard Holden, a Harvard PhD in economics and UNSW Professor of Finance, put it when approached by Daily Mail Australia:

‘The June quarter CPI figures are concerning but unsurprising. They confirm that we have an entrenched, homegrown inflation problem that is even worse than official figures show, given the government’s ‘energy rebate’ fudge.’

For an academic that level of condemnation is akin to calling the Treasurer an economic idiot, personally responsible for the problem he’s trying to hide from.

And Professor Holden is right to call out the energy rebate Chalmers popped into his budget. 

It was brazenly designed to artificially put downward pressure on official inflation figures even though RBA Governor Michelle Bullock notes that the fudge didn’t fool her.

The good professor is also right to call out the inaccuracy of the Treasury’s official inflation figures that have been surpassed today.

The Treasurer crowed about delivering lower inflation forecasts in his budget, yet here we are. 

Chalmers also attacked economists who at the time suggested his budget would be inflationary.

The Treasurer now has mud on his face, that’s for sure. In fact, he’s covered in it from head to toe.