‘Smoke and mirrors’: Liberal MP Sussan Ley accuses Treasurer Jim Chalmers of shifting blame for inflation

Treasurer Jim Chalmers is using “smoke and mirrors” by blaming war in the Middle East for home-grown inflation, Liberal MP Sussan Ley has claimed.

Dr Chalmers, who is at a gathering of finance leaders in Washington DC, has warned an escalation in Israel’s war against Hamas in Gaza and Hezbollah in Lebanon could further destabilise the world’s economy.

“We know that more bloodshed is one of the biggest threats to the global economy,” the Treasurer said in an address at the event.

His comments come after the International Monetary Fund projected Australia’s inflation would stay above 3 per cent in 2025, and would have the second highest inflation in the developed world, behind only Slovakia.

Deputy Liberal leader Sussan Ley said it was the Albanese Government’s policies that were to blame for higher inflation and interest rates.

“There’s a bit of smoke and mirrors here from Jim Chalmers,” she told Sunrise on Friday.

“He’s suggesting that the inflation that we’re seeing at home is because of factors overseas.

“The problem is that the UK, the US, Canada, New Zealand, are all seeing inflation come down. In fact, I think Canada’s interest rates came down by 50 basis points yesterday.”

Ms Ley said the “problem” was the Labor’s “lack of an economic plan,” which was “causing Australians to feel pain for longer”.

Education Minister Jason Clare told the program that Australia had joined almost every nation in the world — including the US and UK — in calling for a ceasefire.

“I think the point Jim’s making is, it has an economic impact. Whenever there’s a war it has an economic impact. Russia’s invasion of Ukraine has done that. We’re now seeing evidence of that here too in terms of oil prices,” Mr Clare said.

The minister pointed to fresh employment data that showed a million jobs had been created since the election.

“We’ve got inflation cut in half, from 6 to 3 (per cent). That’s a good thing,” Mr Clare said.

“We’ve also delivered two surpluses in a row, something that the Libs were never able to do. So, all of those trends are heading in the right direction.”

Dr Chalmers talks come as long-shot ceasefire talks are restarting in Qatar.

The Biden Administration is hoping the recent assassination of October 7 mastermind and Hamas leader Yahya Sinwar can lead to an end of the year-long conflict that began with the murder of 1200 Israelis and has killed more than 40,000 Palestinians in Gaza.