New modelling shows two-thirds of Australia's inflation is homegrown
Business Council analysis shows 3 percentage points of Australia's 4.3 per cent inflation is domestic, with international factors driving the rest.
The Business Council of Australia found that 3 percentage points of the nation's 4.3 per cent inflation comes from domestic spending, not global events. Almost 70 per cent of consumer prices are driven by non-tradables like rent, which are less exposed to overseas factors.
Business Council Executive Bran Black said the government cannot blame the Strait of Hormuz anymore. Government spending has reached its highest share of GDP in almost 40 years, he said.
This excludes the pandemic. Reserve Bank Governor Michelle Bullock confirmed the central bank is tightening monetary policy.
This addresses domestic capacity pressures. Opposition Leader Angus Taylor has backed calls for a 2 per cent cap on annual government spending growth.
- 3 of 4.3 per cent
- Domestic inflation share
- Almost 70 per cent
- Non-tradables in CPI
- 86 billion dollars
- Budget savings over three years
Why it mattersShows government spending is the main inflation driver. The debate shifts away from global blame and toward domestic policy choices.
AustraliaDirectly affects Australian households through inflation and cost of living; shapes government budget and RBA policy decisions.
