Following the higher-than-expected four per cent rise in inflation in the 12 months to May, Treasurer Jim Chalmers said his government was on track to deliver a second surplus, which would weigh on consumer prices.
"But if those opposite want to say that spending in the budget is the primary determinant of inflation, then no wonder they left us with inflation much higher than it is now," he said in parliament.
You don't ease the cost-of-living with nuclear reactors and nasty negativity, you do it with tax cuts, energy rebates and cheaper medicines and that's what people will see from Monday. — Jim Chalmers MP (@JEChalmers) #QT #auspol #ausecon pic.twitter.com/DEzCsNMAiMJune 27, 2024
Budget measures starting from July 1 - including energy bill relief - are expected to feed through to the consumer price index, though the Reserve Bank of Australia has said it plans to "look through" these temporary reductions.
The opposition says the government is leaving the central bank to do all the heavy lifting on inflation.
Shadow Treasurer Angus Taylor said Labor had delivered "three failed budgets" that was keeping pressure on the RBA to keep rates higher for longer, or possible even to hike.
"There is no relief in sight for struggling families," Mr Taylor said in parliament.
Wednesday's inflation result prompted investors to ramp up their rate rise bets and spurred several economists to change their interest figure forecasts.
Economists warn the latest inflation data could mean a longer wait for interest rate cuts. (Flavio Brancaleone/AAP PHOTOS)
The four per cent rise in the 12 months to May took annual inflation to its highest reading in six months and was above consensus forecasts of 3.8 per cent.
The trimmed mean rose 4.4 per cent, up from 4.1 per cent in April, but a separate measure of underlying inflation that strips out petrol and other volatile items moderated to four per cent from 4.1 per cent.
For squeezed borrowers waiting for rate cuts, much hinges on the quarterly inflation print at the end of next month, with another hot reading to push easing further into the distance and may even trigger a hike.
Fresh job vacancy data from the Australian Bureau of Statistics showed the number of open roles down again in May.
Job vacancies were 2.7 per cent lower in May than in February, with the total number standing at 353,000, compared to the number of unemployed of 599,000.
"The number of job vacancies fell further in May 2024, dropping by 2.7%," — Australian Bureau of Statistics (@ABSStats) @Bjorn_Jarvis ABS head of labour statisticsVisit https://t.co/KjWpO5RGD4 pic.twitter.com/dTEMU252I8June 27, 2024
The volume of open roles on offer have been steadily declining from peak levels in mid-2022, Thursday's job vacancy data showed, as global headwinds and higher interest rates buffet the economy.
Yet ABS head of labour statistics Bjorn Jarvis said vacancies were still well above their pre-COVID-19 pandemic levels, with around 55 per cent more vacancies than in February 2020.
National Australia Bank senior economist Taylor Nugent said vacancies remained high compared to the low unemployment rate.
"The still high level of vacancies is likely to slow the passthrough of ongoing cooling in labour demand to a rising unemployment rate," he said.
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