Expert pushes back on Coalition’s inflation talking points against Labor
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A senior lecturer said the Coalition’s Treasury spokesperson cherry-picked and mixed inflation measures to attack Treasurer Jim Chalmers, while other analysts pointed to Australia’s higher headline CPI and a relatively resilient labour market.
The Coalition’s assistant treasury spokesperson, Kevin Hogan, issued a statement after the Reserve Bank of Australia’s recent rate rise, using the moment to rail against why Australia’s inflation is higher than that of comparable advanced economies. Hogan pointed to core inflation of 3.6% in September and claimed it was the highest among major economies such as Canada, Germany, the United States and the United Kingdom.
Sydney University senior lecturer in econometrics Luke Hartigan said Hogan’s comparison was misleading because each country uses different definitions for core inflation. He explained that the United States relies on the Private Consumption Expenditure deflator, which excludes food and energy, whereas Australia’s measure removes a broader set of volatile items. Hartigan said headline CPI gives a more apples-to-apples comparison, showing Australia at 4.3% versus 3.7% in the United States, 3.1% in Canada, 2.8% in Germany, 4.0% in the European Union and 3.6% in the United Kingdom.
Hartigan linked part of Australia’s higher inflation to the Reserve Bank’s relatively gradual rate hikes after the COVID-19 pandemic, describing the approach as a “narrow path” intended to protect labour-market gains rather than punish workers further. He also pointed to a productivity constraint, with the economy’s growth rate near a 2% annual “speed limit.”
Jonathan Kearns, chief economist at Challenger Investment Management, said Australia still faces inflation pressures but emphasised the country’s comparatively strong labour market, noting lower unemployment than New Zealand, Canada and Europe. He referred to the “misery index,” which combines inflation and unemployment, placing Australia in the middle of the range at 9%, between the Euro zone (10.3%) and the United Kingdom (8.3%).