Thank god for small mercies is the reaction inside Labor to today’s falling inflation numbers.
There are certainly no guarantees, but Labor’s brains trust hopes that headline inflation falling to 2.4 per cent in the December quarter – the best consumer price index result since March 2021 – will lead to an interest rate cut next month.
That would allow Albo to call the election in early March after Western goes to the polls, setting the likely election date as April 12, as is widely expected in ALP ranks.
That election date means Treasurer Jim Chalmers wouldn’t have to hand down a deficit budget in late March, because the campaign would have already started.
Instead, he and others will be able to crow about having brought inflation ‘under control’ so that rates can start falling.
The (not inaccurate) claim will be that the solitary cut in February is just the beginning, with more expected throughout the remainder of 2025.
But will this supposed manna from heaven turn out to be a mirage instead? Quite possibly.
I’m not sure voters will reward Labor for a belated single rate cut when there were 12 previous rate rises on its watch.
Especially when other nations already have had larger and more regular rate cuts throughout last year already.
And remember, today we got better inflation numbers, not a rate cut. It may not materialise next month given that the RBA remains concerned about underlying inflation being above its target band.
Besides, the cost of goods and services have already gone up dramatically in the past couple of years. I’m a sense the damage has been done.
Nonetheless, given the woeful state of Labor’s recent polling and the even more woeful performance of the PM – reflected in his poor personal numbers – the government will take good news it can get at this point in time.
It needs something, anything, to start building momentum towards a shift in fortunes. Maybe this is it.
Chalmers all but belled the cat on the likelihood of an early election at his media conference today when he said he couldn’t guarantee he’ll hand down the budget in late March because the PM might call an election before then and that’s his decision to make.
For someone who has been more than happy to lie and mislead on everything from not changing stage three income tax cuts to promising not to increase superannuation taxes before the last election, Chalmers refusing to promise he’ll hand down a late March budget says everything about the government’s strategic planning.
Go early and avoid a nasty budget. Especially if a rate cut gets announced next month.
The first piece in that puzzle – better inflation numbers – was locked in today.