Australian inflation may quicken after cyclone, Treasurer Jim Chalmers warns
Australia’s central bank cut interest rates in February for the first time in four years as inflation slowed
[SYDNEY] Australian Treasurer Jim Chalmers warned that consumer prices could rise after Cyclone Alfred destroyed crops and homes, as he laid bare the economic cost of the disaster.
Initial government estimates indicate the cyclone delivered an immediate hit to gross domestic product of as much as A$1.2 billion (S$1 billion), potentially wiping one quarter of a percentage point from quarterly economic growth, Chalmers said in the text of a speech to be delivered later this week, according to extracts supplied by his office.
“We are still getting a handle on the economic fallout, but it will be substantial,” Chalmers said. “It could also lead to upward pressure on inflation. From building costs to damaged crops raising prices for staples such as fruit and vegetables.”
The prospect of quickening inflation is a blow to both consumers and the government, which is keen for a cost-of-living crisis to ease ahead of an election due by May 17. Australia’s central bank cut interest rates in February for the first time in four years as inflation slowed, but has said it’s cautious about future decisions.
Cyclone Alfred weakened to a tropical low after rolling onto the Queensland coast near Brisbane just over a week ago. It was still powerful enough to cause widespread flooding and property damage, and cut power to almost half a million residents.
About 12 million work hours were lost when businesses temporarily closed, and more than 44,000 insurance claims have already been lodged, according to Chalmers’ speech, which will be delivered to the Queensland Media Club in Brisbane on Tuesday (Mar 11).
The speech will act as a preview to his formal budget address on behalf of the government on Mar 25.
The 2025 to 2026 budget will include at least A$1.2 billion in costs and provisions stemming from the cyclone, such as hardship payments and allowances to impacted people and businesses, Chalmers said. BLOOMBERG
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