Treasurer Jim “Chicken” Chalmers is selling the Budget.
Tuesday’s budget release is expected to predict that, thanks to a new round of cost of living support and slower growth in the upcoming fiscal year, inflation may return to the Reserve Bank of Australia’s (RBA) target range of 2% to 3% by Christmas.
The RBA’s previous week’s inflation projections are far lower than the new ones, which increases the likelihood of a pre-election interest rate cut.
However, Treasurer Chalmers explained that the difference stems from the board’s ignorance of the budget.
He declared: “It’s just a function of timing, not a function of opinion.”
“Inflation will be pressured downward by the budget, not upward”, Chalmers said on Sunday.
It is certainly possible if the Treasurer leans against growth with a larger surplus and conjures up some more rent and power subsidies.
No such leaks have appeared as yet.
I do expect inflation to keep falling owing to the Treasurer’s permanent per capita recession and falling wage growth.
It’s a bit more challenging to sell that, however.
