The budget sales pitch is in full swing, and the Treasurer has rejected claims his $14 billion cost-of-living package will further fuel inflation.
The central fight in the wake of Jim Chalmers’ second budget is whether it will have the overall impact of easing inflationary pressures or make the situation worse in the economy.
Mr Chalmers and Prime Minister Anthony Albanese denied that Labor’s budget does add to inflationary pressures – they argue that the spending is spread out over four years, and it’s targeted at the most vulnerable. However, Economists and the Opposition have zeroed in on the economic theory that if you provide people with energy rebates, it frees them up to spend money elsewhere.
This increases demand, puts pressure on inflation and could potentially cause the Reserve Bank of Australia to feel the need to raise interest rates higher.
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