News location:

Tuesday, November 5, 2024 | Digital Edition | Crossword & Sudoku

Inflation battle not over despite fall: Gallagher

The latest retail sales figures are expected to reveal what workers are doing with their tax cuts. (Bianca De Marchi/AAP PHOTOS)

By Andrew Brown and Poppy Johnston in Canberra

The battle against inflation is far from over despite it falling to a three-year low, the finance minister says, hinting further cost-of-living support could be on the way.

Headline inflation for the September quarter dropped sharply to 2.8 per cent, the lowest level since 2021, and within the Reserve Bank’s target range of between two and three per cent.

However, an immediate interest rate may not be on the cards due to underlying inflation, which removes volatile prices, is at 3.5 per cent.

Finance Minister Katy Gallagher said the inflation data was welcome news, but there was still more work to be done.

“We know people are still really feeling those cost-of-living pressures, so we can’t take our eye off the ball of how we address those pressures going forward,” she told ABC Radio on Thursday.

“Our job is to make decisions and do what we can to ease the inflation challenge, to not make the (Reserve Bank’s) job harder.”

The Reserve Bank will hand down its next decision on interest rates on Tuesday, but economist have forecast a cut won’t be coming until early 2025.

Government assistance for energy bill relief had been a factor in inflation coming down in the past quarter, and Senator Gallagher said further cost-of-living measures were being considered.

“Cost-of-living relief, and looking at how we can provide that whilst getting the budget in better shape and running surplus budgets, as we have the last two, is key to our economic plan,” she said.

“We’ll continue to look at ways we can make a difference for people when they sit around their kitchen tables, trying to make their budgets work, but at the same time, we’ve got to make sure we’re being fiscally responsible.”

After inflation numbers landed broadly where the Reserve Bank expected, attention is turning to consumer spending, with new retail sales figures for September being released on Thursday.

Extra funds have been landing in bank accounts since July 1 when income tax cuts began, bringing with it concerns bolstered incomes would add to inflationary pressures and keep interest rates higher for longer.

Based on bank payments data and surveys, income tax cuts appeared to have been put towards mortgage debt and rebuilding savings,.

Economic teams at all four of the major banks have rates easing pencilled in to begin in February 2025, with Commonwealth Bank ditching its December call after Wednesday’s inflation readout.

CBA head of Australian economics Gareth Aird said the data was “almost certainly a touch too strong on the key underlying measure for the board to entertain the idea of a rate decrease this year”.

“The process of normalising the cash rate will be a story for 2025,” he said.

Starting from early 2025, Westpac and CBA expect four 25 basis point cuts, taking the cash rate to 3.35 per cent.

ANZ has a shallower easing cycle of three 0.25 percentage point reductions expected while National Australia Bank tips five from the February start date.

Who can be trusted?

In a world of spin and confusion, there’s never been a more important time to support independent journalism in Canberra.

If you trust our work online and want to enforce the power of independent voices, I invite you to make a small contribution.

Every dollar of support is invested back into our journalism to help keep citynews.com.au strong and free.

Become a supporter

Thank you,

Ian Meikle, editor

Australian Associated Press

Australian Associated Press

Share this

One Response to Inflation battle not over despite fall: Gallagher

David says: 31 October 2024 at 11:51 am

Interesting mix or reporting on this and I’m glad CityNews hasn’t decided to quote any of the rubbish David Llewellyn-Smith has been saving. The government has clearly timed it’s one off rebates to counter other factors it knows will push up inflation. They got exactly what they want, a headline, with the reality being found beyond the headlines. Apparently the solution is the government keeps providing energy rebates for the foreseeable future. Nice way to transfer tax payer funds into private hands and where did all that super cheap zero emission energy go the government keeps talking about? So why hasn’t David L-S suggested we get ourselves out of the housing crisis by the tax payer paying off the mortgages of all owner occupiers ? I’m sure all those people who own multiple properties would happily sell up if an owner occupier can by it and twice the value, who then have their mortgages paid off by the tax payer.

Reply

Leave a Reply

Related Posts

Follow us on Instagram @canberracitynews