Australia’s annual headline inflation rose from 3.5 to 4 per cent, intensifying pressure on households already facing high mortgage and grocery costs. The article argues there is a tentative positive sign in underlying inflation, but says lasting relief for borrowers would be more likely if the Albanese government restrained spending and helped ease demand pressures.

Underlying inflation increased by 0.2 per cent in August, down from 0.5 per cent in July, while its annual rate stayed at 3.6 per cent; the article cautions that one month does not establish a trend and that slower inflation does not reverse past price rises. The figures pre-date the Reserve Bank’s decision to raise the cash rate to 4.6 per cent, its highest level in 15 years, and rate changes can take one to two years to have their full effect. The author calls for reviewing lower-priority programmes, deferring projects that compete for scarce resources and funding new commitments through savings.