PETER VAN ONSELEN: Jim Chalmers’ excuses for Australia’s inflation crisis spectacularly unravel – with two key stats easily blowing apart the garbage Treasurer is peddling

Treasurer Jim Chalmers wants you to believe that rising inflation is not his fault. The only problem with such spin is that it is completely untrue.

As inflation and interest rates fall globally, Australia has just recorded its first increase in quarterly inflation since the start of 2022, at 3.8 percent.

While the Reserve Bank is unlikely to have the courage to raise rates next week to counter the bad news, there is a risk that next quarter’s inflation numbers will only get worse.

Meanwhile, the government continues to spend money when and where it shouldn’t, further fueling inflation. State governments are making the same mistake.

You can bet the spend-a-thon will only get more extreme as we count down to the federal election. It always does.

Then you need to consider the impact that the July 1 tax cuts will have on inflation and interest rates.

They are just starting to have an effect, which means that their impact will be visible in the coming quarterly updates. They will also put pressure on inflation, which could cause it to rise again.

The finance minister would have you believe this is a global problem. On Wednesday he claimed that “some global pressure” is fueling “persistent” inflation. But that’s not true.

He wants you to realise that inflation is lower now than it was when Labour came to power.

But that was almost two and a half years ago, just after the pandemic, when inflation was skyrocketing everywhere.

The simple fact is that inflation has fallen more elsewhere than here, and is now rising in Australia while it is not rising elsewhere.

For Australians already struggling during the cost of living crisis, this is by no means a disaster.

And the blame lies firmly with a government that is about to be re-elected. And specifically with a Minister of Finance who is neglecting his duty.

That Chalmers’ attempts to absolve himself of responsibility and to claim that international factors contribute to high inflation are complete nonsense is demonstrated by the fact that the inflation figure of 3.8 percent is broken down into what the Australian Bureau of Statistics calls “tradables” and “non-tradables”.

These figures essentially measure the price of goods from abroad compared to what happens at home.

These are the key facts that expose Chalmers’ excuses as nonsense.

The inflation rate on what we get from overseas is just 1.5 per cent. That is even lower than the RBA’s inflation target of 2-3 per cent.

In sharp contrast, domestic inflation for ‘non-tradable goods’ is as high as 5 percent.

In other words, Australia’s rising inflation, adjusted for quarterly figures of 3.8 percent, is a domestic problem.

You don’t have to take my word for it. Here’s how Richard Holden, a PhD in economics from Harvard and professor of finance at UNSW, put it when contacted by Daily Mail Australia:

‘The June quarter CPI figures are worrying but not surprising. They confirm that we have a deep-seated domestic inflation problem that is even worse than the official figures suggest, given the government’s ‘energy discount’ fraud.’

For an academic, such a condemnation is akin to calling the finance minister an economic idiot, personally responsible for the problem he is trying to hide from.

Professor Holden is right when he points out the energy cut that Chalmers has included in his budget.

It was blatantly designed to artificially depress official inflation figures, even though RBA Governor Michelle Bullock says the fraud did not mislead her.

The good professor is also right when he points out the inaccuracy of the official inflation figures from the Ministry of Finance, which have been surpassed today.

The finance minister boasted that he had included lower inflation expectations in his budget, but that is the case.

Chalmers also attacked economists who claimed at the time that his budget would lead to inflation.

The Treasurer certainly has mud on his face now. In fact, he’s covered from head to toe.