Jim Chalmers:
Inflation was steady in January but it’s higher than we’d like and for longer than we’d like. Headline inflation was 3.8 per cent, underlying inflation was 3.4 per cent. We know that these sorts of numbers are difficult news for people who are under pressure. These are the sorts of numbers that we expect to see throughout the first half of the year while the government’s energy rebates come off.
We knew before these numbers that inflation would come in higher than we would like. There is an expectation that they will come in higher than we’d like for longer than we’d like and a big part of the reason for that is because of those electricity rebates coming off. That was a hard decision that the government took but one of the consequences of that decision you can see in these numbers today, not just the headline numbers but also when it comes to electricity.
There are some temporary factors in these numbers but there are some persistent pressures as well and that’s why we are rolling out cost‑of‑living help in a responsible way. We don’t just acknowledge that people are under pressure, we’re acting on it with cheaper medicines and more bulk billing and more tax cuts on the way as well as part of our package to help people with the cost of living in the most responsible way that we can.
Inflation is much, much lower than when we came to office but we need it to be lower still. That’s why a big focus of the budget will be inflation, but also productivity and against the back drop of this global economic uncertainty. So these numbers today are not a surprise, but they are a set of numbers which reflect the pressure that we know people are under and that’s why we’re acting with the cost‑of‑living help that our opponents did not support. Happy to take some questions.
Journalist:
If you cut spending in your budget do you believe inflation will come down faster?
Chalmers:
Well we’ve cut spending in all of our budgets and really one of the defining features of this Albanese Labor government has been responsible economic management. Part of that has been winding back spending where we can in order to make room for other priorities but also to deliver 2 surpluses, to deliver a $235 billion turnaround in the Budget, to get the Liberal debt down by $176 billion and save $60 billion in debt interest. People can expect in our fifth Budget in May that there will be more savings just like there have been savings in the first 4 budgets as well.
Journalist:
Has the Prime Minister demanded that you and other ministers find savings and delay further spending?
Chalmers:
I wouldn’t put it like that, no. We’ve all been as one when it comes to looking for more savings in the budget, making sure that the budget is as responsible and as sustainable as it can be. That’s not just the Prime Minister who holds the view, certainly myself, the Finance Minister and I think throughout the Cabinet, there is recognition that the progress that we’ve made on the budget which has been substantial needs to continue in May and it will.
Journalist:
Higher inflation for longer puts more pressure on the RBA to raise rates. What do you have to say to homeowners who are now facing a second interest rate rise?
Chalmers:
Well, as you know, I don’t predict or pre‑empt decisions taken independently by the Reserve Bank and its Board. There are good reasons not to do that, the Reserve Bank has a number of opportunities to speak publically about the way that they are thinking through some of these sorts of issues. But we know from the forecasts which were released recently by the Reserve Bank that they expect these inflation numbers to continue until around the middle of the year and then for inflation to start to drop away again.
One of the reasons for that, as I said before, is the withdrawal of the Commonwealth’s energy rebate. The Reserve Bank has made it clear on a number of occasions that there are temporary and persistent pressures in these numbers and that it remains to be seen, the composition of temporary and persistent pressures.
But regardless, when it comes to the fight against inflation, since the government was elected we’ve got inflation much lower than it was under our predecessors and certainly much lower than it was when it peaked towards the end of 2022. But we also know that those pressures are still there, that’s why we’re rolling out cost‑of‑living help, it’s why we’re managing the budget and the economy in a responsible way and part of that will be more savings in the May budget.
Journalist:
Treasurer, just a question on a separate matter. Do you agree with your ministry colleague, Julian Hill, that the left cannot allow One Nation to hijack Australia Day and the flag?
Chalmers:
I’m a big supporter of Australia Day and the flag, and these issues pop up from time to time. My primary focus as you’d expect is on the inflation numbers, the numbers in the budget. I haven’t seen all of the detail of what Julian has said or any of the reactions or responses to that. We don’t have any plans to change Australia Day or the flag.
I think the point that I’ve heard Julian make on other occasions or other colleagues make on other occasions is I think the vast majority of Australians reject extremism in all its forms, and I think burning the flag fits in that category. There are existing laws against doing that. From time to time people make other proposals about changing those laws but my focus primarily as you’d expect, as the Australian people would expect, is the economy.
Journalist:
Do you also agree with his concerns about school kids of different faiths not mixing?
Chalmers:
Again, I haven’t seen those comments and I haven’t been focussed on or thinking about those issues. I’ve been thinking about inflation, productivity, and the Budget preparations as you’d expect.
Journalist:
Are homeowners right to blame the Albanese government’s reluctance to significantly cut spending on their mortgage rates going up?
Chalmers:
I’m not sure what evidence you’re referring to there, but I would say broadly in those areas a couple of things. First of all, I take responsibility for all aspects of my job including playing a helpful role in the fight against inflation. We found $114 billion in savings, we’ve made sure that over the course of 2025 private demand and the recovery of the private economy played a much bigger role in generating demand than the public economy, which retreated in the first half of 2025.
Sometimes what happens here is our political opponents deliberately and dishonestly try and conflate 2 things. The first point, that public demand is part of the calculation of aggregate demand in our economy, is not contested by me or by anyone who thinks about these issues. But the reason why inflation came in higher than the Reserve Bank and others expected towards the end of last year is because the private economy recovered quicker than they were anticipating.
And that’s the point that the Governor and others have made really quite clearly on multiple occasions now and so we shouldn’t conflate those 2 issues. I take seriously my responsibilities in the fight against inflation. I take seriously our responsibilities to continue to make the budget more responsible and more sustainable. We have made good progress on the budget but we know that there’s more work to do and that’s the government’s focus.