{"id":330327,"date":"2026-03-15T04:37:08","date_gmt":"2026-03-15T04:37:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/330327\/"},"modified":"2026-03-15T04:37:08","modified_gmt":"2026-03-15T04:37:08","slug":"no-recession-but-inflation-hike-and-increased-cost-of-living-pressure-on-the-way-jim-chalmers-says-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/330327\/","title":{"rendered":"No recession but inflation hike and increased cost-of-living pressure on the way, Jim Chalmers says | Australian economy"},"content":{"rendered":"

Households can expect significant additional cost-of-living pressures because of the war in the Middle East, with Jim Chalmers<\/a> confirming that the government expects inflation to rise beyond 4.5% in Australia.<\/p>\n

But the treasurer said he did not expect the economy to fall into recession because of the war sparked by US and Israeli bombings in Iran<\/a>.<\/p>\n

Now at 3.8% and putting pressure on the Reserve Bank to lift interest rates<\/a> as soon as this week, inflation could peak at the \u201cmid to high fours\u201d according to Treasury modelling, Chalmers said.<\/p>\n

Speaking on Sky News on Sunday, he was asked about National Australia Bank forecasts that inflation could peak above 5% in the next quarter.<\/p>\n

\u201cWe\u2019ve run a couple of scenarios which make it clear on some realistic assumptions about global oil prices and how that would potentially flow through to inflation, and for how long,\u201d he said.<\/p>\n

\u201cIf we were putting pencils down on those forecasts today, we\u2019d have inflation peaking somewhere between the mid to high fours, which isn\u2019t far off some of those private forecasts.\u201d<\/p>\n

Sign up for the Breaking News Australia email<\/a><\/p>\n

Just how long the conflict continued would be critical to the economy hit, Chalmers said.<\/p>\n

But recession \u2013 two consecutive quarters of negative economic growth \u2013 was not something the federal government was \u201canticipating or expecting\u201d.<\/p>\n

\u201cIf you look at the scenarios that Treasury has already run, they expect there to be a hit to growth but not a hit to growth that would deliver, you know, a shrinking economy in the quarters to come,\u201d Chalmers said.<\/p>\n

\u201cAgain, there are a lot of unknowns, there\u2019s a lot of volatility. There\u2019s a lot of uncertainty that existed even before the dramatic escalation of hostilities in the Middle East a couple of weeks ago.\u201d<\/p>\n

The Reserve Bank board, who aim to bring inflation back within the RBA\u2019s 2% to 2% target, will meet this week to consider the cash rate. Economists at the big four banks are tipping an increase, followed by another in May \u2013 a decision due days before the 12 May budget.<\/p>\n

The Greens leader, Larissa Waters, called on the RBA not to increase interest rates. \u201cA rate rise will not stop the chaos of this illegal war that is driving inflation,\u201d Waters said.<\/p>\n

\u201cPeople are already struggling with price gouging at the petrol pump and the supermarket. The RBA should not lift rates when this latest inflation pressure is a supply side mess caused by a pointless war that rate rises can\u2019t stop.\u201d<\/p>\n

Chalmers said the economic shock would not stop reform priorities for his fifth federal budget, expected to include a reduction to the capital gains tax discount. He said the Treasury was \u201cworking up a number of tax reform options\u201d for cabinet to consider.<\/p>\n

Chalmers said Australia had more than enough fuel supply, despite growing interruptions because of the Iranian regime\u2019s moves to block the strait of Hormuz.<\/p>\n

The One Nation MP Barnaby Joyce<\/a> said Australia should join countries moving to shore up international fuel supplies by sending a navy ship to the Middle East.<\/p>\n

The US president, Donald Trump, has urged countries to send warships to defend the strategic strait after US strikes on Kharg Island, Iran\u2019s largest export terminal for oil.<\/p>\n

\u201cYou have to be part of a global effort,\u201d Joyce told ABC TV. \u201cIf you are part of a beneficiary of it being resolved, you got to do something for it.\u201d<\/p>\n

The energy minister, Chris Bowen, on Friday cut fuel companies\u2019 minimum stock obligations to about 700m litres of petrol and 2.2bn litres of diesel respectively, a move to free fuel for regional Australia.<\/p>\n

Australia held about 36 days of petrol and 32 days of diesel<\/a> in reserve on 3 March.<\/p>\n","protected":false},"excerpt":{"rendered":"Households can expect significant additional cost-of-living pressures because of the war in the Middle East, with Jim Chalmers…\n","protected":false},"author":2,"featured_media":330328,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-330327","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/330327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=330327"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/330327\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/330328"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=330327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=330327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=330327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}