Treasurer Jim Chalmers said his first term was about fighting inflation and his second term will be about raising productivity, without forgetting inflation.

Reserve Bank governor Michele Bullock warned this week that inflation remains too high and is being pushed by domestic capacity pressures. She added that productivity is “doing nothing”, highlighting a stalled growth engine.

The latest data show annual headline inflation climbing to 4 percent, mainly because of higher fuel costs, while the annual underlying rate stayed at 3.6 percent. However, both headline and underlying inflation fell in August’s monthly figures.

Chalmers linked the recent spike in prices to the war in Iran and said the government will keep its spending plans, arguing the conflict is the main driver of the inflation rise.

At the same time, the government announced new cost‑of‑living measures – free TAFE courses, cheaper medicines and student‑debt relief. While popular, these programmes add extra demand to an economy already struggling with high prices.

For households, the mix of persistent inflation, stagnant productivity and added demand from government support can mean higher everyday costs and limited relief, making budgeting tougher for many Australians.