As the latest International Monetary Fund (IMF) report reveals Australia is lagging in its battle against inflation, Shadow Treasurer Angus Taylor described it as “just another indicator” of the government’s shortcomings.
“We’re at the back of the pack in dealing with inflation. But we don’t need reports to know that, even though they are telling us that.”
According to the latest IMF report, Australia is poised to record an inflation rate of 3.6 percent by the end of 2025, with only Slovakia expected to experience higher inflation among developed nations. This sharp forecast comes as inflation eases in many other countries, underscoring Australia’s unique economic challenges.
Taylor accused the government of making all the wrong decisions to tackle inflation.
“The treasurer has made all the wrong moves, and our inflation situation is at the wrong end of where we want it to be.”
He further highlighted the disparity in interest rates, noting, “Interest rates are coming down in the U.S., in the UK, in Canada, in New Zealand, and elsewhere in Europe, but not in Australia. That’s because our homegrown inflation is raging.”
Meanwhile, any expectation of an interest rate cut in Australia anytime soon has been ruled out.
Countering Criticism on Inflation
Finance Minister Katy Gallagher acknowledged the IMF report’s findings and the need to look at the broader economic context.“We have our own forecast for inflation, as does the Reserve Bank, and that it doesn’t identically match up with the IMF,” she said.
Gallagher noted the government’s progress in reducing inflation since taking office.
“When we came to government, inflation had a six in front of it; it’s now tracking down with a three in front of it,” she said, adding that Australia has passed its inflation peak.
She urged for a comprehensive view of the economy rather than focusing solely on one statistic.
She stressed that despite sluggish growth, Australia has avoided negative economic results that many other countries are facing.
Strong Labour Market
The IMF acknowledged that Australia’s approach has been more measured, opting for less aggressive monetary tightening than nations like the United States to preserve employment levels.Gallagher also pointed to the health of Australia’s labor market as a positive factor.
“Having created a million jobs since coming to government is a really good thing for the country,” she said, highlighting the importance of employment stability in mitigating inflation.
When asked about Labor’s management of employment, Taylor avoided giving a direct response, stating, “There is a reduction in real disposable incomes and the standard of living of Australian households of almost 10 percent. The reality is Australians are poorer under Labor, and the reality is that there is no end in sight, as we see from this IMF report.”
Gallagher acknowledged the challenges posed by longer periods of inflation and noted that many Australians are feeling the pinch.
Global Factors at Play
While the IMF claims “the global battle against inflation” has largely been won, Gallagher claims there are global factors adding to the crisis.She cited various events, including conflicts in the Middle East and the ongoing war in Ukraine, as influential factors.
“Australia is not immune from global economic impacts, but that isn’t just tied to any single outcome, like an American election,” she stated.
Housing Minister Clare O'Neil also weighed in on discussion surrounding the IMF report.
“Inflation has more than halved since we came to office, and a big part of that has been our restraining government spending after a decade of the coalition, telling us year on year that they would deliver surpluses. They didn’t deliver a single surplus,” she stated.
O'Neil acknowledged the challenges many Australians face, saying, “I know people at home are really struggling with making ends meet. The government’s very alive to that.”
