“Federal and state governments must not be allowed to use the conflict in the Middle East as a get-out-of-jail-free card for creating the inflationary environment that Australian working families are being forced to endure every day,” said Dr Kevin You, Senior Fellow at the Institute of Public Affairs.
Today, the Australian Bureau of Statistics updated its Consumer Price Index data with the reference period February 2026. It shows:
- Consumer prices rose by 3.73 per cent in the twelve months to February 2026.
- To provide context, consumer price inflation in the 12 months to February 2025 (i.e., last year) was about 2.38 per cent.
- The largest contributors to annual inflation were housing, food and non-alcoholic drinks, and recreation and culture.
The period covered by the data was overwhelmingly before the start of the war in Iran, which began just before the close of business on 28 February 2026.
“The government has ramped up spending, has been relying on immigration to grow the economy on paper, has tied up productive industries with red tape, and has destroyed productive wealth-creating industries to make way for more bureaucrats. The treasurer should have seen inflation coming from miles away,” said Dr You.
IPA research has found that since the year 2000, the public sector has been replacing the private sector in the Australian economy.
In the early 2000s, private investment and net export made up a higher share of the economy (at 28 per cent) than government spending (at 22 per cent). In 2025, it flipped, with government spending making up a higher share of the economy, at 28 per cent, than private investment and net export, at 20 per cent. The rest is made up of household spending, which has remained steady at about 50 per cent of gross domestic product.
“Concerningly, even the private sector is now increasingly dependent on taxpayer subsidies. Consultants working for government departments, wind and solar generators being underwritten by taxpayers, and building contractors engaged in white elephant projects are inhibiting genuine value-creation, while cash is being recklessly spent at the same time,” said Dr You.
“Australia’s economy has for too long been reliant on mass migration and government spending. This needs to end. The path to non-inflationary economic growth is clear. Stop reckless spending, end mass migration, and cut government red tape.”
Chart: Monthly consumer price index
To download the IPA’s research click here.
