Finance Minister Chalmers on inflation in Australia — ABC News Australia
In Australia, Finance Minister Jim Chalmers defended the government’s actions to curb inflation ahead of an expected increase in the cash rate. He said that global pressures and high fuel prices, rather than government spending, were significant drivers of price growth, ABC News Australia reports.
Deficit lower than forecast
Chalmers confirmed that the budget deficit for the past financial year was $6 billion lower than the May forecast of $28.3 billion. According to him, this indicates that the government has restrained the pace of spending growth.
The Reserve Bank of Australia is due to make a decision on the cash rate on Tuesday. According to ABC, financial markets and economists are almost unanimous in expecting another increase, after which the rate could reach 4.6%. It was last at approximately this level in October-November 2011.
Budget revenue and spending
The minister also said that projected government debt was lower than anticipated in the May budget. Health spending and other payments were $1.4 billion below forecast, while revenue exceeded expectations by $4.6 billion.
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The increase in tax revenue was linked to better-than-expected investment returns from pension funds. It was not driven by higher receipts from employees, while mining industry revenue did not reach the budget forecast. Finance Minister Katy Gallagher explained the budget savings by lower spending on aged care, child care and the Pharmaceutical Benefits Scheme.
Dispute over the causes of inflation
Chalmers acknowledged that difficult months lie ahead for households and said the inflation problem had existed before the Iran-US war but had intensified because of it. Shadow Finance Minister Tim Wilson, in turn, accused the government of excessive spending and said rate increases could create critical difficulties for many families and small businesses.
The Australian Bureau of Statistics is due to release inflation data for August on Wednesday.
