{"id":958354,"date":"2026-11-09T16:24:41","date_gmt":"2026-11-09T16:24:41","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/958354\/"},"modified":"2026-11-09T16:24:41","modified_gmt":"2026-11-09T16:24:41","slug":"is-the-coalitions-criticism-of-labor-on-inflation-fair","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/958354\/","title":{"rendered":"Is the Coalition’s criticism of Labor on inflation fair?"},"content":{"rendered":"

Inflation is high, interest rates have been raised to an 18-year peak, and the treasurer says things will get harder before they get easier<\/a>. Suffice to say, the economic vibes in Australia are not great right now.<\/p>\n

Even the Reserve Bank of Australia has acknowledged<\/a> that the public has lost faith in the bank\u2019s ability to bring down inflation. Voters are also losing trust in Labor\u2019s economic management, according to a new Australian Financial Review poll<\/a>.<\/p>\n

As confidence in the economy plummets, opinions<\/a> about why it\u2019s happening are on the rise<\/a> \u2014 and one in particular caught Crikey\u2019s attention.\u00a0<\/p>\n

The Coalition\u2019s assistant treasury spokesperson Kevin Hogan put out a press release<\/a> in the wake of the RBA\u2019s rate rise last week, asking the question: \u201cWhy is inflation higher in Australia?\u201d\u00a0<\/p>\n

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\n\t\t\t\t\"Labor\t\t\t<\/a><\/p>\n

\u201cIf you listen to Jim Chalmers, our high inflation is all because of the war in the Middle East, oil prices, and data centres. But Australia isn\u2019t the only country facing those global pressures \u2014 so why is our inflation so much worse than comparable economies?\u201d Hogan wrote.\u00a0<\/p>\n

\tIndependent. Irreverent. In your inbox<\/p>\n

\n Get the headlines they don\u2019t want you to read. Sign up to Crikey\u2019s free newsletters for fearless reporting, sharp analysis, and a touch of chaos. <\/p>\n

By continuing, you agree to our\u00a0Terms & Conditions<\/a>\u00a0and\u00a0Privacy Policy<\/a>.<\/p>\n

\u201cThe difference is that our economy is resting on the shoulders of Jim Chalmers, who is out of his depth and doesn\u2019t understand the economic reality Australians are facing.\u201d<\/p>\n

For the Coalition, blaming the situation on the treasurer is a reflex, and it pays off politically: according to the AFR poll, the opposition is gaining points because of its image of being strong on economic management. <\/p>\n

Hogan\u2019s question is undoubtedly relevant. But Hogan used some curious metrics to underscore his point that Australia is doing worse than other countries.<\/p>\n

\u201cIf we look at core inflation, which removes volatile things like fuel, Australia has the highest of any major advanced economy at 3.6% in September. Higher than Canada (2.2%), Germany (2.4%), the European Union (2.5%), the United States (2.6%), and the United Kingdom (2.8%),\u201d Hogan wrote.\u00a0<\/p>\n

Hogan was \u201cnot being very honest\u201d when comparing those core inflation figures, Sydney University senior lecturer in econometrics Luke Hartigan told Crikey.\u00a0The reason is that each country chooses to exclude different costs to arrive at an inflation figure free from the turbulence of volatile product prices.\u00a0<\/p>\n

\u201cFor example, the US looks at the Private Consumption Expenditure deflator (PCE) removing food and energy,\u201d Hartigan said. \u201cThis is not the same as the Consumer Price Index (CPI) we look at here. Further, they simply remove food and energy, while we remove extreme price moves which can be different items each quarter.\u201d<\/p>\n

The UK, in arriving at the 2.8% inflation figure Hogan cited, does not include<\/a> price changes in housing, energy, food, alcohol and tobacco. When doing their own calculations, Australian government statisticians remove<\/a> fruit, vegetables, car fuel and holiday travel, arriving at a 3.6% change over the 12 months to September. (We assume that was the figure Hogan cited, although it could also have been the trimmed mean, which was also at 3.6%. His office did not respond to questions from Crikey).<\/p>\n

\u201cThe more comparable measure is to refer to \u2018headline\u2019 CPI inflation,\u201d Hartigan said. \u201cHere the US is 3.7%, Canada is 3.1%, Germany is 2.8%, the European Union is 4.0%, and the UK is 3.6%, while we are 4.3%.\u201d<\/p>\n

In other words, Australia is still doing worse, but the difference is not as stark with this comparison method. So the question remains: why is Australia\u2019s inflation rate so high?\u00a0<\/p>\n

According to Hartigan, the RBA\u2019s slow pace of lifting rates coming out of the COVID-19 pandemic is one part of the answer.\u00a0<\/p>\n

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\n\t\t\t\t\"The\t\t\t<\/a><\/p>\n

\u201cIt did not lift rates as aggressively as some other economies. The bank\u2019s explanation was that it was trying to hold onto the gains made in the labour market (the low unemployment rate),\u201d he said. \u201cThis was called the \u2018narrow path\u2019 strategy. The other explanation is that Australia had stronger growth compared to those other countries (besides the US) over that period and we have a productivity problem. The economy\u2019s \u2018speed limit\u2019 is around 2% per annum and we have been hitting that limit.\u201d<\/p>\n

Jonathan Kearns, the chief economist at Challenger Investment Management, told Guardian Australia<\/a> that while it was \u201cvery clear\u201d Australia had a worse inflation problem than other countries, it was important to keep in mind Australia\u2019s relatively strong labour market.\u00a0<\/p>\n

\u201cOur performance in unemployment has been much better than in New Zealand, Canada and in Europe, and that is a positive thing for Australia,\u201d he said.\u00a0<\/p>\n

When looking at the so-called \u201cmisery index\u201d \u2014 measuring the experience of households by adding unemployment and inflation figures together \u2014 Australia sits right in the middle with a score of 9%, between the Euro zone (10.3%) and Canada (9.6%), and the UK (8.3%), the US (7.9%) and Japan (4.5%), according to The Guardian.<\/p>\n","protected":false},"excerpt":{"rendered":"Inflation is high, interest rates have been raised to an 18-year peak, and the treasurer says things will…\n","protected":false},"author":2,"featured_media":958355,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,21450,164,5465,5626,42086,264285,7054,4847],"class_list":["post-958354","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-cpi","tag-economy","tag-inflation","tag-interest-rates","tag-jim-chalmers","tag-kevin-hogan","tag-rba","tag-unemployment"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/958354","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=958354"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/958354\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/958355"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=958354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=958354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=958354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}