Treasurer Jim Chalmers is blaming the oil price spike for inflation but local factors are increasingly driving inflation.
“The world is inflicting price pressures on Australians and we are doing the best we can to ease them,” Chalmers said this week after the release of Australia’s latest consumer price index report.
That’s faster than inflation for tradeable goods and services which are highly exposed to international trade. Tradeable inflation rose 0.7 per cent for the quarter and 3.7 per cent through the year, with automotive fuel the largest driver. A gradual unclogging of global supply chains that were choked up during the pandemic has moderated tradeable goods prices.
“These are the sorts of things that can be reasonably persistent over time, so these are the sorts of things that we’re that we’re watching,” Bullock said. She attributed services inflation to “electricity costs, rents and wages”.. To be sure, there is no wage-price “spiral”, but wage rises in labour-intensive services industries are contributing to inflation “persistence” at a time of weak labour productivity.
While he was talking about the Treasury’s outlook, the Treasurer sailed very close to appearing to “jawbone” the independent RBA by echoing Bullock’s earlier use of the word “material”.
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