Treasury projects inflation to peak at 5% in 2025/26 before easing to 2.5% by 2029/30 amid fiscal tightening.
Australia’s 2025/26 budget deficit is projected at A$28.3 billion, down from the previously forecast A$36.8 billion, as inflation pressures persist. The Treasury expects CPI to hit 5% in 2025/26 before stabilizing at 2.5% through 2029/30, aligning with long-term targets.
The 2026/27 deficit is seen at A$31.5 billion, with A$31.0 billion projected for 2027/28. GDP growth is forecast at 2.25% in 2025/26, slowing to 1.75% in 2026/27 before recovering to 2.25% in 2027/28. Unemployment is expected to rise modestly to 4.25% in 2025/26 and 4.5% thereafter.
The AUD/USD showed no immediate reaction, trading at 0.7220, down 0.4% on the day.