National budget forecasted to improve inflation
New figures on the eve of the federal budget show inflation is forecast to be slightly better than was expected six months ago.
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00:00 When the Treasurer Jim Chalmers hands down his budget tomorrow evening, it's expected
00:07 to show that inflation is moderating at a faster rate than Treasury was predicting six
00:14 months ago.
00:15 So it was expected six months ago that by mid-year this year, inflation would be at
00:20 3.75%.
00:22 It's now forecast to be at 3.5% by mid-year.
00:27 I should point out that isn't as good as the budget last year was expecting, so 12 months
00:32 ago, but it is better than what was expected six months ago.
00:37 Now Treasury has also said that inflation could drop to within that target rate of between
00:42 2% and 3% by the end of this year.
00:46 That's quite different to what the Reserve Bank was forecasting just last week.
00:52 They were saying that inflation will return to the top end of that target rate of between
00:58 2% and 3% by the end of 2025.
01:03 Now both the Finance Minister Katie Gallagher and the Shadow Finance Minister Jane Hume
01:08 have responded this morning to why that is.
01:11 Take a listen.
01:12 The difference really is that Treasury have been able to incorporate some of the decisions
01:17 that we've taken in the budget into their forecasts.
01:20 Obviously that's not available to the RBA ahead of the budget and they're both made
01:24 independently.
01:25 So those forecasts from Treasury are the ones that will be published in the budget and they
01:29 take into consideration all of the set of decisions that we've taken.
01:34 Well it's certainly very different from the RBA's forecast that was made only six days
01:39 ago.
01:40 I suppose it's really up to the Treasurer now to tell us exactly how the Government is
01:45 going to bring inflation back down sooner.
01:48 Now Treasurer Jim Chalmers says in terms of inflation it's not mission accomplished.
01:54 Of course he says that there is still work that needs to be done in terms of addressing
02:00 the cost of living crisis that Australians are facing.
02:04 Now I did want to touch on economic growth as well because the outlook there is that
02:08 it's worsening.
02:09 So the forecast for economic growth has been revised down to 2% for the next financial
02:15 year.
02:16 So a few months ago that forecast was at 2.25% so a bit of a revision down there as
02:23 well.
02:24 So those are some of the big numbers that we can expect to see in tomorrow's budget.
02:28 Of course all will be revealed at 7.30 tomorrow.
02:32 We're just getting a sort of drip feed of information if you like for now and have been
02:37 for the past week or weeks or months really too.
02:41 Now some of the policies that we do know about in terms of the budget tomorrow are things
02:46 like the stage 3 tax cuts.
02:48 We did hear from the Finance Minister Katie Gallagher this morning that an additional
02:52 package that supports people in terms of the cost of living through the next 12 months
02:56 or so is expected.
02:58 Of course we've also been hearing in recent weeks about the changes to HEX debts and also
03:04 more funding assistance for women and children leaving domestic violence situations as well.
03:12 But hang in there, all will be revealed tomorrow.
03:14 [BLANK_AUDIO]