Australian underlying inflation remains above target as household costs rise
The article criticises Australian Treasurer Jim Chalmers for previously suggesting inflation had been brought under control, arguing that July’s figures show continued pressure on household budgets. It says the gap between a modest fall in headline inflation and persistently high underlying inflation matters because essential costs, mortgage repayments and rents remain elevated.
It reports annual trimmed-mean inflation at 3.6%, above the Reserve Bank of Australia’s 2–3% target, while headline inflation eased to 3.5% and underlying prices rose 0.5% in July. Over the previous year, housing costs rose 5%, electricity 6.1%, childcare 7.3%, food and non-alcoholic drinks 3.2%, and rents 3.6%; the article also cites a 4.35% cash rate and a 0.7% July fall in national property values. The author attributes some pressure to global oil prices but argues domestic government spending also contributed.
- Underlying inflation remained above the RBA target in July.
- Essential household costs and borrowing expenses continued to rise.
- The article disputes government claims that inflation progress is promising.
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Inflation is the rate at which prices rise over time. Australia’s central bank aims to keep it between 2% and 3%, using interest rates to influence spending and borrowing. Headline inflation covers all prices, while underlying inflation removes some items that can change sharply from month to month to show broader price pressures.
The Reserve Bank of Australia sets the cash rate, which affects mortgage repayments, savings returns and borrowing costs across the economy. Higher rates are intended to slow inflation, but they can add to the costs faced by households with home loans and businesses with debt.
Housing, electricity, food and childcare are among the everyday costs closely watched in inflation figures because they take up a large share of many household budgets. Rents and property prices are also important: rents affect tenants directly, while property values can influence household wealth, construction and the wider economy.
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The case for
Critics argue that the continued 3.6% trimmed-mean inflation rate shows it was premature to say inflation was under control, because this measure better captures persistent domestic price pressures than the more volatile headline figure. They contend that households judge economic conditions through rents, mortgages, energy, food and childcare, where increases remain significant, and that fiscal restraint is needed if government spending is adding demand while interest rates are already high.
The case against
Supporters of the Treasurer can argue that inflation control is a gradual process rather than a single threshold, and that the easing in headline inflation is meaningful evidence of progress amid global oil-price pressures and other external shocks. They may also say policy should weigh the hardship caused by high rates and living costs against the need to reduce inflation, and that public spending on services or household support should not automatically be treated as the main cause of persistent price growth.
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Originally published by Daily Mail as “Jim Chalmers said he’d slain Australia’s inflation dragon. Two years later, it’s breathing fire over household budgets – and ordinary Aussies are paying a brutal price”.