By Salma El-Sakka
Australian Treasurer Jim Chalmers attributed accelerating inflation to the escalating Middle East conflict, but polling indicates voters remain unconvinced by the government's explanation.
Inflation Jumps to 4.3%
The Australian Bureau of Statistics reported that inflation rose to 4.3% in the September quarter, up from 4%, with a 9.4% surge in fuel costs identified as the primary driver.
Fuel Costs Drive Increase
Petrol and diesel prices were 24% higher than a year earlier, reflecting the global oil shock triggered by the war in the Middle East.
Global and Domestic Pressures
Reserve Bank Governor Michele Bullock said overseas developments are complicating the central bank's task of returning inflation to its 2.5% target. A boom in datacentre investment is also adding to capacity pressures in an economy already short of workers and materials.
Voters Blame Government Spending
The latest Essential poll shows 32% of voters believe government spending is the top cause of rising living costs, while only 24% cite overseas events and 19% point to supermarket pricing. Economists including Chris Richardson argue public expenditure, now at record highs as a share of the economy, is hindering the inflation fight.
Underlying Inflation Also Rises
The RBA's preferred measure of underlying inflation, which excludes volatile items, increased from 3.6% to 3.7% in the year to September.
Rate Hike Looms
Financial markets all but certain the Reserve Bank will deliver a fifth interest rate increase next Tuesday, lifting the cash rate to 4.85% — its highest since the global financial crisis. RBA Chief Economist Sarah Hunter said there are no signs the economy is in or heading toward a near-term recession.
Political Pressure Mounts
Households face a difficult summer with mortgage rates at 2008 levels, soaring petrol prices and rising unemployment. The Essential poll found 61% of Australians believe the country is on the wrong track, up from previous readings. Chalmers is under pressure to shift the narrative with December's mid-year budget update as the government enters its third year in office.
