{"id":548242,"date":"2026-03-18T11:40:13","date_gmt":"2026-03-18T11:40:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/548242\/"},"modified":"2026-03-18T11:40:13","modified_gmt":"2026-03-18T11:40:13","slug":"war-in-iran-could-push-australian-inflation-past-5-per-cent-treasurer-jim-chalmers","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/548242\/","title":{"rendered":"War in Iran could push Australian inflation past 5 per cent: Treasurer Jim Chalmers"},"content":{"rendered":"

March 18, 2026 \u2014 6:22pm<\/p>\n

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Treasurer Jim Chalmers has warned inflation could spike above 5 per cent if the Middle East war drags on, hurting living standards and wiping billions from the economy as business chiefs move to a COVID-style posture to avoid supply shocks in the construction, medical and food sectors.<\/p>\n

Prime Minister Anthony Albanese will appoint a national fuel co-ordinator when he meets state and territory chiefs at a national cabinet on Thursday. NSW Premier Chris Minns and Victorian Premier Jacinta Allan are pushing for emergency co-ordination on fuel stocks.<\/p>\n

\"TreasurerTreasurer Jim Chalmers on Tuesday.Alex Ellinghausen<\/p>\n

The Strait of Hormuz shutdown is roiling commodity markets<\/a> well beyond oil, threatening shortages in key products such as urea, used in fertilisers, and naphtha, used in plastics, and raising anxiety about a months-long slowdown.<\/p>\n

A day after the Reserve Bank hiked the cash rate due to persistent inflation, Chalmers released modelling showing the economy could be scarred for years if neither United States President Donald Trump nor the Iranian regime brought a swift end to the war.<\/p>\n

Related Article\"The<\/a><\/p>\n

In a speech to Australian Business Economists on Thursday, Chalmers will say that if oil remains about $US100 a barrel for the first half of this year, \u201cthe prospect of inflation peaking in the high 4s or even higher this year is very real\u201d.<\/p>\n

If oil reaches $US120 a barrel and then takes three years to fall back to its pre-conflict level, inflation is likely to push towards 5.5 per cent or even higher.<\/p>\n

Oil at $US100 a barrel clips about 0.2 per cent from economic growth. But higher-priced oil would leave a \u201cbigger scar\u201d, he will say, although economists say the flow-on effect of the war remains unpredictable.<\/p>\n

\u201cThere would be an immediate hit to output, but it would build over time,\u201d he will say. \u201cTreasury estimates that GDP would be 0.6 per cent lower in 2027, and even by 2029 would still be below where it would have been without the conflict.\u201d<\/p>\n

The Reserve Bank is forecasting economic growth to slow to 1.6 per cent next year, below the long-term average.<\/p>\n

Chalmers will say Treasury is modelling a third more drastic outlook. Some analysts have suggested oil could push beyond $US150 a barrel.<\/p>\n

\"RBARBA governor Michele Bullock at her press conference on Tuesday.Louise Kennerley<\/p>\n

The opposition has been trying to remind voters that inflation had risen outside the bank\u2019s target band from the back half of last year, well before the war, off the back of private demand and high federal and state government spending.<\/p>\n

\u201cIf only you could pay your mortgage with Jim Chalmers\u2019 excuses,\u201d shadow treasurer Tim Wilson said on Wednesday. \u201cThe Reserve Bank has made it crystal clear in its statement. It was the second sentence: this is an interest rate hike off the back of inflation data in the second half of last year.\u201d<\/p>\n

Bank governor Michele Bullock warned of a recession on Tuesday and said<\/a>: \u201cHigher petrol prices will add to inflation, but they\u2019re not the reason for today\u2019s decision.\u201d<\/p>\n

\"DonaldDonald Trump on Tuesday with the Irish prime minister.AP<\/p>\n

The US-Israeli strikes and the indiscriminate Iranian missile barrage have upended the government\u2019s planning for the May budget<\/a> and locked ministers in near-daily national security committee meetings. Trump scolded Australia and other nations<\/a> on Thursday after they declined to send forces to help reopen the Strait of Hormuz, through which a fifth of global oil supply normally passes.<\/p>\n

Albanese said Thursday\u2019s national cabinet meeting would focus on fuel security. He is also preparing to announce bailouts for Australia\u2019s last two oil refineries, as first reported by this masthead<\/a> on March 9.<\/p>\n

Raising a comparison with the COVID supply shock, Albanese said he would be asking premiers to appoint a senior official to co-ordinate fuel distribution. \u201cThat will be about making sure that we deal with the issues that Australia, and indeed the world, is confronting, with the issue of fuel security,\u201d he said in Tasmania.<\/p>\n

\u201cAll of our ships have arrived at this point in time, but we\u2019ve had a surge in demand, which is leading to some shortages in some areas, particularly of diesel.\u201d<\/p>\n

Related Article\"Donald<\/a><\/p>\n

Several business chiefs spoken to by this masthead on Wednesday said the federal and state governments were making contingencies for worst-case scenarios over coming weeks. The Albanese government said on Tuesday that shipments of oil were safe until well into April.<\/p>\n

\u201cIt\u2019s a COVID-101 playbook that we\u2019re learning from,\u201d said Tim Piper, Victorian head of the Australian Industry Group.<\/p>\n

Piper explained that government and industry groups were working together to make sure essential services such as water and waste management had sufficient fuel to operate.<\/p>\n

Minns said: \u201cOur biggest concern right now is diesel supply, which keeps trucks moving, farms and construction projects running, and goods and food getting around the state.<\/p>\n

\u201cWe\u2019re keen to see a national plan that sets out a clear escalation pathway, including what further actions may be taken if the conflict continues and conditions worsen.\u201d <\/p>\n

Allan said it was \u201cimportant as a nation that we work together on having continuity plans in place\u201d, adding that she had appointed a state controller as would exist in a natural disaster.<\/p>\n

Industry Minister Tim Ayres will give a speech on Thursday arguing that an overemphasis on open markets and efficiency had hollowed out state capacity and weakened the national resilience of countries like Australia.<\/p>\n

Ayres will say Labor\u2019s $23 billion Future Made in Australia policy is an attempt to reinvigorate Australia\u2019s chemicals and steel sectors, and others critical to national security. The opposition and Productivity Commission have questioned the reversion to industry policy.<\/p>\n

\u201cAustralia lost touch with its economic and strategic vulnerabilities. The prevailing economic mantra was efficiency,\u201d Ayres will tell the John Curtin Research Centre.<\/p>\n

\u201cThe Iranian regime might blockade the Strait of Hormuz, but it cannot stop Australian wind from driving Australian turbines to power Australian blue-collar industry.\u201d<\/p>\n

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n

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\"PaulPaul Sakkal<\/a> is chief political correspondent. He previously covered Victorian politics and has won Walkley and Quill awards. Reach him securely on Signal @paulsakkal.14Connect via X<\/a> or email<\/a>.\"ShaneShane Wright<\/a> is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"March 18, 2026 \u2014 6:22pm Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":548243,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,44],"class_list":["post-548242","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/548242","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=548242"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/548242\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/548243"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=548242"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=548242"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=548242"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}