EDITORIAL: Jim Chalmers is happy to play along with war game

Don’t mention the war? Actually, please do.

Jim Chalmers, perhaps smiling quietly to himself while admiring his sneaker collection, might have been relieved to hear Reserve Bank of Australia governor Michele Bullock blame the conflict in the Middle East for ballooning inflation.

First Ukraine and now Iran, these are the wars that keep on giving. Giving, that is, a convenient smokescreen for a problem way closer to home.

“Higher oil prices have increased inflation directly through their impact on petrol prices, but it’s also had an indirect impact as many firms have passed input cost pressure arising from elevated fuel prices through to the prices of other goods and services,” she told the House standing committee on Economics.

“Because of these capacity pressures and the Middle East conflict, inflation is likely to remain elevated for some time.

“It is a well-known fact that supply shocks are very difficult for central banks to deal with.”

She talked about a bubble-up and she even talked about the weather.

What she didn’t talk about was the spendthrift government sitting on its hands while the Strait of Hormuz becomes an increasingly volatile flashpoint.

Left unchecked, Australia’s economy will do a Mr Creosote and go and go until it blows.

The way the RBA governor is talking, we could have two more interest rate rises before Christmas.

Throw in price hikes for iphones thanks to the memory chips being mainlined by data centres and suddenly there’s not much under the tree.

Three hours after Bullock finished giving evidence, Westpac changed its forecast to have the Reserve Bank raising interest rates on September 29 instead of November 3, despite the RBA’s next meeting occurring a day before the release of new inflation data.

Two of Australia’s big four banks — Westpac and NAB — are now predicting a September rate hike while the Commonwealth Bank and ANZ are still expecting the next move to be on Melbourne Cup day.

The futures market is now regarding another hike by Christmas as an 82 per cent chance. That would take the cash rate to a 15-year high of 4.6 per cent and add $120 to monthly repayments on an average, new mortgage of $731,000.

Chalmers will petulantly complain about any criticism of the government when it comes to inflation.

Yes we know you didn’t start the war. But this stuff doesn’t happen by accident.

Chalmers will say it’s not his fault the economy is running so hot.

But what is undeniably his fault is flagrant government spending and a failure to address it that borders on negligence now the war in Ukraine is into its fifth year

Chalmers said the Reserve Bank’s three interest rate rises so far this year were hurting borrowers.

“We do understand that people are under pressure, that’s why we’re rolling out cost of living help and tax cuts.”

To say ‘I’m sorry you can’t afford to fill your car’ while at the same time writing cheques as Iran continues to ratchet up is disingenuous.

And to keep talking a big game about the cost of living while actively contributing to it is just irresponsible.

Responsibility for the editorial comment is taken by Editor-in-Chief Christopher Dore