While money can’t buy everything, the Australian Government can “buy” a lower Consumer Price Index (CPI). Indeed, its decision to spend $3.5 billion on an Energy Bill Relief Fund is an innovative, and likely effective, policy response to current idiosyncratic and challenging economic circumstances.

Jim Chalmers’ use of new policy tools to solve new kinds of inflation has enraged many commentators, but the anger of those stuck in the past doesn’t mean we shouldn’t be looking to the future. For many of the loudest voices in Australia’s economic debate, it is a truism that public spending causes inflation. Public funding is simply fuel for the inflationary fire that they fear more than anything, including recessions and climate change.

For these “inflation hawks”, the idea that increasing public spending could lower inflation is simply absurd. But just because powerful people believe something doesn’t make it right.

In Australia, the most common measure of inflation is the CPI. It represents an incredibly large “basket of goods” that captures the price of pretty much everything a consumer might spend money on. Of course, it includes the price of bread and milk and petrol, but it also includes the price of building a new house, private health insurance, private school fees and........

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