Treasurer Jim Chalmers has issued an unusual warning ahead of tomorrow’s crucial inflation figures, telling Australians that headline inflation could rise more than expected as state energy rebates are stripped away.
‘Economists expect that the unwinding of some state energy rebates will push the headline number up a bit tomorrow,’ Chalmers told Parliament during Question Time on Tuesday.Â
‘And that is why they have encouraged us to focus largely on the underlying number.’Â
The underlying inflation measurement strips out government rebates and other measures, while the headline figure includes every economic factor that affects the cost of living.Â
Chalmers has variously referred to both figures during his time as Treasurer depending on the country’s economic circumstances.Â
He went on to defend Labor’s economic record and claim inflation would be lower under Labor than when the Coalition left office in the wake of the Covid pandemic in 2022.Â
Chalmers’ warning comes after Australia’s inflation spike stunned markets last quarter when the September CPI jumped to 3.2 per cent year-on-year, up from 2.1 per cent in Q2, marking the fastest increase since mid-2024.
The Reserve Bank’s preferred trimmed mean measure also accelerated to 3.0 per cent, its first increase since late 2022.
Jim Chalmers (pictured) took the remarkable step of predicting that inflation will jump tomorrow, when official figures are released
That surprise spike forced the RBA to slam the brakes on its interest rate-cutting cycle earlier this month, holding the cash rate at 3.6 per cent despite three cuts earlier in the year.
Tomorrow’s release will be the first full monthly CPI report from the Australian Bureau of Statistics, moving from quarterly data.
Financial markets expect annual inflation to rise to 3.6 per cent, up from 3.2 per cent, as rebates that previously softened power bills begin to roll off.
Major banks warn the headline figure could overshoot forecasts, driven by housing and energy costs.
The central bank has made it clear that sustained inflation above target could kill hopes of further rate cuts in the near future.
Some economists even warn that if CPI jumps beyond 3.6 per cent, the RBA may consider raising rates again in early 2026.
‘There’s more uncertainty than usual in the estimates,’ said CBA senior economist Trent Saunders, pointing to the unwinding of rebates and stubborn housing costs.
Criticism is mounting that public sector spending has ballooned to unsustainable levels, adding fuel to inflationary pressures.
Fresh data from the Australian Bureau of Statistics reveals public sector wages skyrocketed to $249.5 billion in 2024–25, a 7.6 per cent increase on the previous year.
The Albanese Government has ordered departments to slash their budgets by 5 per centÂ
Commonwealth pay packets alone surged 9.5 per cent to $40.9 billion, while state and territory governments spent $191.1 billion, up 7.3 per cent.
The workforce also swelled by 3.3 per cent, with nearly two million state employees and 385,000 Commonwealth staff now on the payroll.
Amid growing alarm over spiralling costs and their impact on inflation, Finance Minister Katy Gallagher on Tuesday ordered all departments to cut spending by 5 per cent.
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Jim Chalmers hints at inflation surge for Australia just 24 hours before official figures are released