Treasurer Josh Frydenberg says his fourth budget will provide practical measures to ease cost of living pressures, as the government gears up for a federal election in May.
While he was light on detail in a series of television interviews on Sunday, Mr Frydenberg said Tuesday’s budget will contain responsible and practical measures, and he does not expect it will add to prevailing inflation pressures.
“There will be a number of measures in the budget that go to the heart of the cost of living issue,” Mr Frydenberg told ABC television.
But he warned inflation will accelerate as a result of a spike in fuel and food prices due to the war in Ukraine, and that will be reflected in the budget forecasts.
Annual inflation was running at 3.5 per cent as of December.
Economists expect the budget to show a much-improved bottom line, alongside major forecast upgrades for growth, wages and inflation, and an unemployment rate that is projected to be well entrenched below four per cent.
Rising cost of living pressures and unsettled consumer confidence may be taking the gloss off retail spending after being a key plank in Australia’s economic recovery from the Delta COVID-19 variant late last year.
The Australian Bureau of Statistics will release retail trade figures for February on Tuesday, with the consensus among economists pointing to a 0.9 per cent increase after the 1.8 per cent increase in January.
Confidence has declined further in recent weeks due to the floods along the Australian east cost and escalating concerns over inflation.
The weekly ANZ-Roy Morgan consumer survey is also released on Tuesday.
Last week confidence fell to its lowest level since September 2020, while consumer inflation expectations jumped to an 11-year high of six per cent as petrol price soared above $2 a litre.
After the budget dust has settled, the Australian Bureau of Statistics will release building approvals for February and job vacancies for the three months to February on Thursday, while the Reserve Bank will release credit data for last month.
Notably, economists expect building approvals to show a strong 10 per cent rebound in February, after slumping 27.9 per cent in January due to staff shortages at council offices during the Omicron outbreak and a higher than usual uptake of holiday leave.
The week wraps up with the CoreLogic home value index for March on Friday, alongside the lending indicators for February from the ABS.
Meanwhile, Australian shares look set to get off to a firm start to the week after key US stock indexes closed mostly higher on Friday.
However, uncertainty remains for investors as they try to work out the likely course for inflation and the global economy as the repercussions of Russia’s invasion of Ukraine continue to play out.
The S&P 500 rose 22.90 points or 0.5 per cent to 4,543.06, the Dow Jones Industrial Average gained 153.30 points or 0.4 per cent to 34,861.24, and the Nasdaq fell 22.54 points or 0.2 per cent to 14,169.30.
Australian share futures rose 33 points or 0.44 per cent to 7413.
On Friday the Australian benchmark S&P/ASX200 index closed up 9.2 points, or 0.12 per cent, to 7,387.1.