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Consumer survey points to weak recovery and higher inflation



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John Hewson Leader of the Opposition M e d i a R e l e a s e

202/92 18 June 1992

CONSUMER SURVEY POINTS TO WEAK RECOVERY AND HIGHER INFLATION

The June Westpac-Melbourne Institute Consumer Sentiment survey- raises further doubts about the strength of recovery and inflation.

While the results are subject to some volatility, the sharp 7.5 per cent fall was remarkable. The fall has wiped out much of the rise in the index in 1992.

The Treasurer was happy to use the past rise in the index in his statement on the economic context of the Premiers' Conference last week to claim that the recovery was consolidating. Will he now admit that the collapse in consumer sentiment is further evidence that the One Nation forecasts are unachievable?

The Government has been consistently overstating the strength of the recovery. Last week Mr Howe tried to suggest that a rise in housing commencements driven solely by public sector demand (private commencements fell sharply in the March quarter) provides evidence of a recovery!

The Treasurer has refused to publicly confirm reports that the Government's own forecasting group has revised the One Nation forecasts down significantly.

The Prime Minister made a farcical attempt to skirt around the issue in Melbourne on Monday by re-defining "recovery" to exclude the farm sector. Even after turning his attention to non-farm GDP for 1991/92 (which was not even included in the One Nation

forecasts), the best he could do was admit that "we may get it, we may not."

The Consumer Sentiment survey also shows that the Prime Minister's claim to have "beaten" the "legacy of high inflation" may be premature. Inflation for the next 12 months is expected to shoot up to 5.2 per cent. With the Government handing out real wage rises and superannuation increases at a time of very weak

recovery, a number of forecasters are expecting a resurgence in inflation.

The Government must tell the truth about the economy and admit that the One Nation economic strategy has failed.

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