Annual inflation rose to a 16-month high of 3.8% in October, adding to pressure on the government as it seeks to make savings across the public sector.

When governments, whether Commonwealth, state or local, increase spending it adds to inflation. Opinions differ on whether Commonwealth spending makes a significant difference. Opposition finance spokesperson Jane Hume argues it does; Treasurer Jim Chalmers countering “the Reserve Bank hasn’t mentioned that in their recent statements”.

Reducing government spending will, however, help curb inflation. It may be one of the motives for a reported federal government decision to seek budget cuts of up to 5% across its departments and agencies.

Finance Minister Katy Gallagher has denied the reports, saying in question time:

the idea that we are imposing a 5% cut on agencies is incorrect. […] What we have asked agencies to do is to think about […] all the programs they administer and to consider whether they are still priorities.

Put like that, it is........

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