As we enter a new year, the forthcoming election is quite close and will dominate political discussion for the next few months.

For many of us who are reasonably secure and relatively well off, our votes will be determined by issues such as the environment, the integrity of government, and what we think is needed for a fair and cohesive society.

But that is not what matters most for the majority.

As was famously quipped back in the Clinton era in the United States, “it’s the economy, stupid” that will determine the result of the next election, with inflation and the associated cost-of-living crisis being the acid test of economic management.

The Coalition like to sell themselves as the better economic managers, and according to the opinion polls, the majority of electors believe them. But what does the evidence say?

Since the Albanese Government was elected in May 2022, the rate of inflation, as measured by the consumer price index has averaged 4.1 per cent per year. That is distinctly more than the target rate of 2 to 3 per cent.

However, at the time of the election, inflation as measured by the annual increase in the CPI for the June quarter of 2022 was already as high as 6.1 per cent, and this peaked at 7.8 per cent in the December quarter of that year.

As is universally recognised, inflation only responds to policies after a lag. Accordingly, it is arguably the Coalition that should take the blame for that peak inflation rate.

In retrospect, at least, the fiscal support offered by the Coalition Government to support employment during the Covid epidemic was excessive, and nothing was done to claw back those excesses. Also, the Reserve Bank was too slow to start raising interest rates.

Now, after two and a half years of the Labor Government, the most recent data show that the annual increase in the CPI for the September quarter was only 2.8 per cent and only 2.1 per cent for the 12 months ending in October 2024.

Despite a slight bump to 2.3 per cent in the November quarter, on the face of it, inflation is therefore back in its target range.

The RBA’s preferred measure of inflation is, however, the so-called trimmed mean, which removes the influence of volatile prices.

Over the year to the November quarter 2024, that trimmed mean increased by 3.2 per cent, which means that according to the RBA inflation may still not be........

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