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Australia’s ‘targeted’ US$10 billion budget offers relief for cost of living, but can it curb inflation?

  • Canberra is fighting rising living costs and inflation by allocating nearly US$10.1 billion over the next four years to relief efforts for Australians
  • But, some financial analysts are concerned that spending – while not involving direct cash handouts – would actually fuel inflation

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Canberra is fighting rising living costs by allocating billions to relief efforts for Australians, but some analysts believe the spending will fuel inflation. Photo: Shutterstock
Su-Lin Tanin Singapore

Canberra has pushed back against suggestions its relief package to help Australians cope with living costs may inadvertently push up prices for the people it seeks to help, after critics said the package may fuel inflation.

Calling the package the “centrepiece” of the budget, Treasurer Jim Chalmers on Tuesday said the government would spend almost A$15 billion (US$10.1 billion) over four years to help citizens with various financial assistance including lowering utility bills, funding out-of-pocket health costs and rental support.

Some financial analysts expressed concern that the plan would drive up inflation – something Chalmers sought to dispel on Wednesday.

“The reason we can provide this help without adding to inflation in our economy is because it’s very targeted. It’s over a period of time. It doesn’t all hit the economy at once,” he said.

Living costs in Australia rose sharply during the pandemic. Photo: EPA-EFE
Living costs in Australia rose sharply during the pandemic. Photo: EPA-EFE
Living costs in Australia rose sharply during the pandemic, with inflation hitting a 30-year high of 7.8 per cent in the last quarter of 2022 before sliding back down to 7 per cent in the March quarter.
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