Chalmers: inflation to rise above 4.5% but no recession expected

Households can expect significant additional cost-of-living pressures because of the war in the Middle East, Jim Chalmers said, confirming the government expects inflation to rise beyond 4.5%. Inflation is now 3.8% and, according to Treasury modelling, could peak in the “mid to high fours”, which is putting pressure on the Reserve Bank to lift interest rates.

Speaking on Sky News, Chalmers said how long the conflict continued would be critical to the economic hit but that the government was not expecting a recession. He noted Treasury scenarios showed a hit to growth but not the two consecutive quarters of negative growth that define a recession.

The Reserve Bank board will meet this week to consider the cash rate; economists at the big four banks are tipping an increase followed by another in May. Greens leader Larissa Waters urged the RBA not to lift rates, saying a rise would not stop inflation driven by the war and warning about price gouging at petrol pumps and supermarkets.

Australia

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