Soft landing for economy looking ‘more and more likely’ as inflation falls – Chalmers
The treasurer says the worst of the inflation challenge is now “well and truly behind us”.
Chalmers says the big drivers that moderated the inflation rate were construction costs, rates and insurance.
That I think is quite an encouraging sign that inflation is moderating more quickly than anticipated even as recently as the forecasts that we released in December … Australians collectively can be really proud of the culmination of developments that we have seen in our economy in recent times.
Inflation is down, wages are up, unemployment is low, and 1.1 million jobs have been created during the course of this Albanese Labor government. The soft landing that we have been planning for and preparing for is now looking more and more likely. Many countries around the world have paid for this kind of progress on inflation with much higher unemployment or with negative quarters of economic growth.
Key events
Chalmers says the “biggest risk” to inflation, cost of living and the economy is “Peter Dutton and a Coalition government”.
If you look at the impact of the cost of living measures over recent years … it is worth reminding people that Peter Dutton did not support cost of living help for Australians doing it tough. If Peter Dutton had his way, Australians would have been thousands of dollars worse off and they would be worse off still if he wins the election …
He will push up bills and nuclear insanity that he has been trying to force on the Australian people. The choice of the contrast is very clear that the biggest risk to inflation and the cost of living and the economy in 2025 is Peter Dutton and a Coalition government.
On to questions.
Steadying his mini victory lap, Chalmers acknowledges cost of living pressures are not disappearing, “but they are easing”.
We know the fight against inflation is not yet over but these are incredibly encouraging signs. We are getting on top of this challenge in our economy. The worst of the inflation challenge is now well and truly behind us and that is one of the reasons why we are confident but not complacent about the economy in the year ahead.
He then takes aim at the Coalition.
We know our political opponents will try and dismiss and diminish what Australians have been able to achieve together in the economy. When Australians are doing it tough, we know how important our cost of living help is and we know that the best thing we can do and most important focus that we can maintain is on the cost of living and that is the government’s approach.
The Albanese Labor government is focused on beating inflation and helping with the cost of living and building Australia’s future, our political opponents Peter Dutton and the Coalition are focused on conflict and culture wars.
Soft landing for economy looking ‘more and more likely’ as inflation falls – Chalmers
The treasurer says the worst of the inflation challenge is now “well and truly behind us”.
Chalmers says the big drivers that moderated the inflation rate were construction costs, rates and insurance.
That I think is quite an encouraging sign that inflation is moderating more quickly than anticipated even as recently as the forecasts that we released in December … Australians collectively can be really proud of the culmination of developments that we have seen in our economy in recent times.
Inflation is down, wages are up, unemployment is low, and 1.1 million jobs have been created during the course of this Albanese Labor government. The soft landing that we have been planning for and preparing for is now looking more and more likely. Many countries around the world have paid for this kind of progress on inflation with much higher unemployment or with negative quarters of economic growth.
inflation figures ‘better than market expected’
Chalmers says inflation was “much higher and rising fast” under the Liberals, sitting at 6.1% when Labor came into office.
He says today’s figures are “better than the market expected” and “lower than forecast”.
We have been able to get on top of this inflation challenge and to get it down in a very meaningful way. Inflation is now almost a third of the 6.1% that we inherited when we came to office.
If you look at the numbers, headline inflation was just 0.2% in the December quarter – that makes it 2.4% higher through the year which is around one quarter of its peak and in the bottom half of the Reserve Bank’s target band.
It means our headline inflation is now lower than most major advanced economies including the US, the UK and Germany.
New figures show ‘sustained progress’ against inflation – treasurer
Chalmers is up now. He says today’s figures are “very welcome developments” showing “meaningful and substantial and now sustained progress in the fight against inflation”.
It means that headline inflation is now at an almost four-year low and now sits in the middle of the Reserve Bank’s target band and underlying inflation is now at its lowest in three years.
These are very welcome developments. We don’t pretend it is mission accomplished on inflation but we are making very substantial progress. On every measure we have now made substantial and sustained progress in this fight against inflation.
The treasurer, Jim Chalmers, is expected to address the media shortly following the release of today’s inflation figures.
Sitting where they are, he’s likely to have a bit of a spring in his step.
Melbourne school fined $140k after student’s death on overseas trip
A Melbourne private school has been fined $140,000 after one of its students fell fatally ill on an overseas class trip.
Kilvington grammar school student Lachlan Cook, 16, suffered diabetes complications during the to Vietnam in September 2019 and later died in hospital in Melbourne.
He had been self-managing his type-1 diabetes when he fell ill and was taken to hospital 24 hours after first showing symptoms.
Lachlan suffered a heart attack and was flown back to the Royal Children’s hospital in Melbourne, with his life support switched off in October 2019.
A coroner in 2023 found his death was preventable, with WorkSafe issuing charges to both the school and travel company World Challenge Expeditions.
Kilvington and the travel company both pleaded guilty in the Victorian county court to failing to ensuring that persons other than employees were not exposed to health and safety risks.
Judge Angela Ellis on Wednesday sentenced Kilvington to a $140,000 fine, while World Challenge was fined $150,000.
Both the school and organisation received a conviction.
Jonathan Barrett
Australian dollar falls over inflation data
The Australian dollar dropped in response to the inflation data, as currency traders start to price in an interest rate cut next month.
The local currency fell from just over US62.5c to US62.3c. The Australian dollar typically falls when rates are lowered, and rises when they increase.
The fall is modest given there were widespread expectations in the market of an incoming interest rate cut before the inflation data was released.
The Australian Bureau of Statistics (ABS) has released a detailed breakdown on the consumer price index (CPI) data.
Michelle Marquardt, ABS head of prices statistics, said December quarter’s rise was the same as the 0.2% increase in the September 2024 quarter – the lowest recorded since mid-2020, when childcare was free during Covid.
Annually, the December quarter’s rise of 2.4% was down from 2.8% in the September quarter. Annual trimmed mean inflation was 3.2% in the December quarter, down from 3.6% in the September quarter.
The trimmed mean excluded price falls in both electricity and automotive fuel this quarter, alongside other large price rises and falls.
The main contributors to the quarterly rise were recreation and culture (+1.5%), driven by domestic holiday travel, and alcohol and tobacco (+2.4%), which were largely offset by falls in housing (-0.7%) and transport (-0.7%).
Marquardt said the commonwealth’s energy relief fund rebates led to the large fall in electricity prices, which dropped by 9.9% in the December quarter.
Without the rebates, electricity prices would have risen 0.2% this quarter.
Jonathan Barrett
The underlying rate, which strips out volatile price swings, is even lower than consensus, and should cement a rate reduction next month.
AMP’s chief economist, Shane Oliver, said before the data release that it “will be very hard for the RBA not to cut rates at its February meeting” if the underlying rate dropped to 3.2%.
The headline inflation rate, which includes government rebated-electricity bills, dropped to 2.4%, dropping faster than the market predicted.
Inflation rate falls to 3.2%
Jonathan Barrett
The Australian Bureau of Statistics has released today’s highly anticipated consumer price figures.
Australia’s underlying inflation rate has fallen to a three-year low of 3.2%.
The annual rate for the December quarter will raise hopes of a pre-election interest rate cut next month.
‘Our vision for an inclusive Australia’: Rishworth launches new disability strategy
The minister for social services, Amanda Rishworth, addressed Deakin University in Geelong this morning to officially launch the federal government’s updated disability strategy.
She said the strategy was “Australia’s plan to make life better for people with disability”.
Australia’s disability strategy sets out our vision for an inclusive Australia. It is a commitment by all levels of government to take actions to improve the lives of people with disability in Australia, an Australia where the 5.5 million people with disability have the support they need to live the life they want and participate as equal members in the community.
Rishworth said the updates to the strategy reflected what had been heard since its original launch three years ago, including through the royal commission.
We heard from you that having accessible housing and reducing homelessness was a really important issue for people with disability – and that’s why the updated strategy now has a priority focus area on this.
States and territories will increase the supply of accessible housing for people with disability. And the commonwealth will be looking at ways to make it easier for people renting to find properties that will meet their access needs.
Jonathan Barrett
All eyes on inflation data
Australia’s consumer price figures will be out shortly, providing a critical data set that will inform the Reserve Bank’s cash rate-setting decision next month.
The RBA will largely be interested in the underlying inflation rate for the December quarter, which strips out volatile price swings including the government rebated-electricity prices.
The economist consensus is for an annual 3.3% reading, according to Bloomberg. This could leave the likelihood of a rate cut at about 80%, as per current market pricing.
A 3.2% reading would lock in a rate cut, according to the chief economist at Betashares, David Bassanese.
Meanwhile, a higher-than-expected 3.4% reading would mean mortgage holders – and the government – would need to bear with the current elevated rates.
The next rate decision is seen as politically sensitive given a cut could provide ammunition to the government to argue that inflation is getting under control and cost-of-living relief is on its way before an election.
