Labor's Inflation Cooker on the Boil
Australia's headline inflation accelerated to 4.3% in the year to September, up from 4.0% in August, according to Australian Bureau of Statistics data reported by multiple outlets. Trimmed mean inflation, the Reserve Bank of Australia's preferred gauge, stood at 3.6% annually, up from a revised 3.5% to August. Underlying prices rose 1.0% over the September quarter, above the RBA's forecast of 0.8%. RBA deputy governor Andrew Hauser told Senate estimates that inflation remains too high, and market pricing put the chance of a November hike at more than 60%.
Prime Minister Anthony Albanese has conceded the government must find more savings as internal Labor pressure builds over the cost-of-living crisis. Speaking in Melbourne, he said Labor had saved 178 billion Australian dollars from unexpectedly strong revenue and challenged the Coalition not to demand savings while opposing every saving. Treasurer Jim Chalmers has separately promised another savings package by year's end, framing spending restraint as part of the inflation fight.
The savings push is running into parliament. The government's plan to wind back the private health rebate for people over 65, worth 3 billion dollars and earmarked for aged care, was blocked in the Senate by a combined vote of the Coalition, the Greens and the crossbench, forcing the government to reintroduce it. Other savings, including 37.8 billion dollars from the National Disability Insurance Scheme and 14.8 billion dollars from government administration, also need legislation. State Labor figures have joined the calls for restraint.
The human cost is stark. Household power bills are up 35% since the start of 2022, and national housing costs rose 5.7%, with Adelaide at 7.9%. One financial stress report found wages rose 20.3% between July 2020 and June 2026 while living costs rose 28.4%, with employed households facing a 33.8% rise in expenses driven by interest rates. About one in ten callers to the National Debt Helpline could not pay routine bills such as car registration and medical costs. Unemployment has climbed to a near five-year high while the RBA's 2 to 3% target stays distant.
The RBA has already raised the cash rate four times this year to 4.6%, its highest level in 15 years. Commonwealth Bank economists now expect a 25-basis-point move on Melbourne Cup day to 4.85%, which would be the fifth hike this year and the highest level in 18 years. Labor's primary vote sits around 27%, nearly 8 points below its election result. Albanese and Chalmers blame global fuel shocks from the war in the Middle East, but voters who have lived under Labor for more than four years increasingly hold the government responsible as Christmas approaches.