The Federal Treasurer is blaming international volatility for grim inflation figures released today that show the sharpest rise in cost of living pressures in more than two decades.
- Prices for goods and services rose 5.1 per cent over the past year
- The figures add fuel to the debate between the Coalition and Labor over economic management
- Mr Fydenberg says the figures are a reminder of the current “complex and volatile” economic environment
Prices for goods and services rose 5.1 per cent over the past year — excluding the biggest price moves, so-called core inflation was 3.7 per cent.
That was well above what many economists had forecast, and beyond the Reserve Bank of Australia’s preferred inflation range of 2-3 per cent.
The figures, released in the middle of the 2022 federal election campaign, add further fuel to the debate between the Coalition and Labor over economic management and planning.
Speaking in Melbourne, Treasurer Josh Frydenberg said the data was a reminder of the current “complex and volatile” economic environment.
“Australia is not immune from the international pressures driving up inflation,” he said.
The COVID pandemic has led to major supply chain disruptions which are seeing freight costs increase in some cases by fivefold or more.
“The war in Ukraine has seen a spike in fuel prices, gas prices and commodity prices being felt here at home.”
Mr Frydenberg said the key drivers of the inflation figures were housing, food and transport costs.
“The single biggest increase with respect to fuel prices, up 11 per cent in the quarter and 35 per cent higher throughout the year,” he said.
“This is the single biggest increase in fuel prices since Iraq’s invasion of Kuwait more than 30 years ago in 1990.”
Last month’s budget included a number of temporary measures aimed at easing the cost of living, including a six-month halving of the fuel excise, one-off cash payments for pensioners, and extra tax relief for low- and middle-income earners.
Shadow Treasurer Jim Chalmers said the surging figures were a “wake-up call” to the federal government about cost of living pressures.
“We’ve said that there’s a role for cost of living relief in the near term, as Australians are getting absolutely smashed by [the] skyrocketing cost of living and falling real wages,” Shadow Treasurer Jim Chalmers said.
“Our beef with the government is there are absolutely no plans beyond those temporary cost of living measures to deal with the inflationary measures in the economy.
“It’s quite extraordinary that this government, after almost a decade in office, is entirely bereft of any ideas beyond a plan to get them through the election.”
Later on Wednesday, Prime Minister Scott Morrison turned the inflation figures into a political attack, arguing the Australian economy was faring better than those in other similar countries, and inflation would be worse under Labor.
“The reason that (rising inflation) is occurring, I think Australians understand,” he said.
“But what we have demonstrated by keeping [Australia’s] triple-A credit rating, by having an inflation rate below countries like Canada and New Zealand, points out that we’re a government — the Liberals and Nationals — that can manage these issues and keep as much pressure downward on those rising forces, as opposed to a Labor Party that doesn’t have an economic plan, that can’t manage money, and you don’t know.”