Monique Wright:
Well, mortgage holders are feeling a bit more hopeful about a February rate cut this morning after new figures showed underlying inflation has fallen to 3.2 per cent in November.
Michael Usher:
The money markets now believe there’s a greater than 70 per cent chance the Reserve Bank will cut interest rates in their next meeting, setting the stage for more cost‑of‑living relief, which is welcome. And happy to say that the Treasurer, Jim Chalmers, joins us live from Brisbane this morning. Treasurer, good morning to you.
Jim Chalmers:
Good morning, Michael and Mon.
Usher:
Yeah, alright. Inflation’s coming down. That’s good news for you, or it’s steadying at the very least. This is what most people want to know, I think. Where exactly are prices going to improve? Supermarket, petrol station insurances, general cost of living? What’s going to become cheaper sooner?
Chalmers:
What we saw in yesterday’s numbers was pretty encouraging because it showed that that inflation, which was extremely high a couple of years ago, is now at more moderate levels. It’s come down in a really substantial way and now in a really sustained way. Underlying inflation came down, headline inflation has been at the bottom half of the Reserve Bank’s target band now for some months for the first time since 2021. That’s all encouraging news.
When it comes to inflation, what the Reserve Bank tries to shoot for is inflation somewhere between 2 and 3 per cent. So, prices going up a little bit, but not a lot. What we saw a couple of years ago was prices going up a lot, and that’s why it’s so encouraging to see that inflation come off in the numbers that came out yesterday.
Usher:
Appreciate all of that but people will want to note we’re not economists, we’re not going to analyse it too deeply. Most Australians aren’t.
Chalmers:
Understood.
Usher:
But if you’re saying the economy’s getting better, inflation’s steadying or a bit under control, not as bad as it was a few years ago post‑COVID. When are things going to get cheaper and what sort of things are going to get cheaper sooner?
Chalmers:
What we saw yesterday, for example in the numbers was that electricity bills over the last year have come down by 21.5 per cent. So, that’s a good example of what you’re talking about. In some of the other instances, what we saw is instead of prices growing very quickly, they’re growing much more slowly. Things like building costs, for example, have come off a bit. Some food and groceries have come off a bit as well. We’re confident that the worst of this inflation challenge is behind us, but we’re not complacent about it because we know that people are still under pressure, which is what you’re rightly referring to in your question. And that’s why the cost‑of‑living help is so important, those tax cuts, energy bill relief and the like because we know that there’s still a lot of quite substantial pressure on family budgets.
Wright:
Yeah. Treasurer, we really appreciate it when you come on, when the Prime Minister comes on or one of your Ministers and you talk about the raft of measures, as you’ve done this morning, what you’re doing, what the government has been doing to try and help with this. Yet the perception is still that you’re not doing enough. Is that hard for you to hear that still, it just doesn’t seem to be cutting through, people just still feel it’s too tough to live?
Chalmers:
Oh no, I understand it, Mon. I understand that when people are under pressure that there will be a level of anxiety about that. I think I’ve acknowledged that on a number of occasions. But more than acknowledge it, you know, we’re trying to do something about it, but we have to do that in the most responsible way that we can. What we’ve tried to do is manage the budget in a responsible way at the same time as we’ve provided pretty substantial and pretty meaningful cost‑of‑living help. But there will always be people who would like us to do more. I understand that. I appreciate that. I listen very respectfully to the community when they tell us that they would like us to do more. But I think my job is to help people understand that we are already doing a lot. People would like us to do more, but we’re doing a lot. And we’re trying to do it in the most responsible way that we can so that we’re part of the solution to these cost‑of‑living pressures rather than part of the problem by letting the budget get out of control.
Wright:
Everyone is desperately hoping for that rate relief, as I know that the government is, too. Treasurer Jim Chalmers, we really appreciate your time. Thank you.
Chalmers:
All the best, Mon. Thanks.