Budget to show inflation has moderated faster than expected
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The news: Treasurer Jim Chalmers will seize on updated Treasury forecasts on inflation to argue the government's cost-of-living policies are working.
The numbers: The federal budget will show inflation has moderated faster than Treasury expected in the mid-year economic and fiscal outlook (MYEFO).
Treasury is forecasting that headline inflation could return to the target band of 2-3% by the end of 2024, earlier than the 2025 timeframe it forecast at MYEFO. The mid-year update had inflation for 2023-24 at 3.75%, while the budget will have it at 3.5%.
The context: However, the budget will also forecast a doomier outlook for growth, with real GDP growth downgraded in 2024-25 and 2025-26.
The budget papers will say that there remains "considerable uncertainty around the outlook for the domestic and global economy".
What they said: "The budget will put downward pressure on inflation, not upward pressure on inflation," Chalmers said, echoing comments made to Capital Brief in an interview last week.
"Our budget will be part of the solution to cost of living pressures, not part of the problem.
"Inflation is moderating in welcome ways but it’s not mission accomplished because people are still under pressure.
"Inflation is still the big near-term challenge in our economy which is why the government is doing its bit in the Budget."
The source: Treasurer's office
