Inflation reprieve for Albanese as he targets supermarkets in price ...
Inflation reprieve for Albanese as he targets supermarkets in price shock campaign
Inflation fell to its lowest rate in nearly two years, cementing expectations of interest rate cuts later this year in a political reprieve for the federal government which is facing sustained criticism of its plans to bring down living costs.
Price rises in the year to November fell to 4.3 per cent from 4.9 per cent ahead of the Reserve Bank’s first rate call for the year next month. This was slightly lower than predicted and driven by reductions in the price of lamb, beef and vegetables, while fuel inflation decreased to 2.3 per cent from 8.6 per cent.
Prime Minister Anthony Albanese and Treasurer Jim Chalmers in Queensland this week.Credit: Twitter
Treasurer Jim Chalmers and Prime Minister Anthony Albanese started the year pledging to reduce financial pressure on voters by putting heat on supermarkets through a new pricing review as the treasurer said Labor would explore new cost-of-living measures as long as they did not fuel inflation.
Chalmers cautioned against getting carried away with the monthly inflation figure, which can be volatile, but claimed partial credit for the slowdown and claimed electricity bills would have been doubly as high without government intervention.
“We are coming at this inflation challenge from every angle: competition, migration, infrastructure, cost-of-living relief that we are rolling out, budget repair,” he said.
“This is welcome and encouraging news that the government’s policies are helping to put downward pressure on inflation. But we know that there’s more work to do.”
Coalition shadow treasurer Angus Taylor.Credit: Alex Ellinghausen
But shadow treasurer Angus Taylor said Labor had been flat-footed through 2023 – dominated by the failed Voice referendum – and fuelled inflation through fiscal profligacy and new workplace laws.
“Labor has been dragged kicking and screaming to take action on [grocery costs], demonstrating once again how out of touch it is with families,” he said.
“This review [of the Food and Grocery Code of Conduct] will not fix Labor’s failure to address inflation at its source and will not make up for Labor’s failure to get inflation under control.”
Coles announced its lowest lamb prices in four years on Wednesday, a day after Labor threatened action to lower supermarket prices.
Credit: Illustration: Matt Golding
But Nationals leader David Littleproud said the review and a separate Senate inquiry on potential grocery price gouging were toothless tigers, while the Australian Competition and Consumer Commission could use its powers to compel supermarkets to reveal how much they paid suppliers of fresh produce.
General manager of policy think tank the Australian Farm Institute, Katie McRobert, said primary producers were reporting the prices they receive at the farm gate had dropped so much in some cases that they were dumping fresh produce, rather than incurring costs to transport goods to market.
Starting October last year, some farmers in NSW, Victoria and Queensland were offering free sheep to anyone who could take them after lamb prices plummeted 40 per cent to $4 a kilo and below the cost of transportation.
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Beef prices slid even farther, down 66 per cent in the 12 months to October, but retail prices remained high for both products.
“We need to get serious about transparency in the supply chain,” said National Farmers Federation president David Jochinke.
Littleproud said he advised the government in October that the opposition would support an ACCC supermarket pricing inquiry.
“The tools were available to the government and are still available to the government to let the cop on the beat off the leash and to actually investigate evidence on meat and fresh produce, to be granular in their investigation of the supermarket’s behaviour,” Littleproud said.
Former Victorian Farmers Federation president David Jochinke.Credit: Fairfax Media
“Instead they’re talking more broadly about reviews that will take months and send no signal to the supermarkets.”
Independent economist Nicki Hutley said while the data showed inflation was heading in the right direction, the trimmed-mean figure (an average calculated after removing a portion of the largest and smallest values) was higher than the headline inflation figure at 4.6 per cent.
“You don’t want to get too excited too early,” she said. “Things like utilities, rents, house prices, insurance, all the usual suspects, are staying very sticky and high.”
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While falls in the prices of goods caused inflation to ease, the reserve bank has remained worried about stubbornly high prices in the services sector. The cost of getting a haircut rose by 6.3 per cent in the 12 months to November and takeaway food prices jumped 7.1 per cent.
These persistent price rises mean most economists are pricing in a rate cut in the second half of this year.
However, AMP chief economist Shane Oliver said Wednesday’s results were consistent with his expectation the RBA would hold the cash rate steady at 4.35 per cent in February before cutting from June.
“We continue to expect the first-rate cut in June with the cash rate falling to 3.6 per cent by year-end,” Oliver said.
The timing of any rate cuts is likely to factor in the government’s calculations on the date of the next election, at which Labor will seek to claim its policies have defeated the scourge of inflation and, in turn, brought down mortgage rates.
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