HE federal opposition’s scare campaign against the carbon tax has failed its first test. The Bureau of Statistics reports that seasonally adjusted employment rose by 14,000 in July – the month the tax took effect – while unemployment fell to 5.2 per cent.
For the government, it was a double bonus after the TD Securities-Melbourne Institute monthly inflation gauge reported on Monday that inflation rose just 0.2 per cent in July, and was flat over the past three months.
While this was only the first test of the carbon tax, if the duo of rising employment and low inflation continues, it could have huge political implications – undermining Opposition Leader Tony Abbott’s repeated claim that the carbon tax would be ”like a wrecking ball through our economy”.
THE Reserve Bank of Australia has nudged up its forecast for the inflation rate, saying the carbon tax is playing a part in the rise.
The RBA is forecasting consumer prices are set to rise by 2.5 per cent in the year to December 2012, slightly higher than the 2.25 per cent predicted in May.
Over the next year, prices will rise at the higher end of the RBA’s 3 per cent target range.
In its Statement on Monetary Policy released on today, the RBA said the effect of the exchange rate would likely push up the costs of tradeable items as the effect of earlier rises in the exchange rate fade.
The introduction of the carbon price also played a part, but its effect on inflation will wane, it added.
“The carbon price effect on inflation will largely have passed by late 2013 and underlying inflation is forecast to be around the middle of the target range (of 2 to 3 per cent) thereafter,” the RBA said.