Forget the mortgage belt: Gamers are getting smashed and Chalmers should worry

October 28, 2026 — 3:51pm

Put aside your pity for those with a mortgage or people struggling to put food on the table. It’s the gamers who are being hit by inflation.

And as gamers deal with huge spikes in the prices of their consoles, the policy problems facing the Reserve Bank, Jim Chalmers and the phalanx of state and territory treasurers follow.

The latest monthly inflation figures from the bureau of statistics all-but guaranteed that the Reserve Bank’s monetary policy committee will inflict another rate rise on the economy on Melbourne Cup Day.

The 4.3 per cent headline inflation rate for September, and 3.6 per cent for the key underlying measure were, as bank deputy governor Andrew Hauser said, too high.

As Hauser and governor Michele Bullock have often reminded Australians, the RBA has only one tool to deal with inflation. Hence its four rate rises this year with the big chance of another that will push the cash rate to 18-year high of 4.85 per cent next Tuesday.

By lifting rates, the bank is trying to reduce overall demand across the economy with the stated aim of bringing inflation back to its 2-3 per cent target - something it has spectacularly failed to do since the fag end of the Abbott government - by the end of next year.

It can definitely be assisted by a reduction in government spending, at the federal and state level.

Chalmers and Finance Minister Katy Gallagher have to use their upcoming budget update to actually reduce spending.

No matter how they characterise the pressures on government services, a budget deficit of $31.5 billion (after a $22.3 billion shortfall in 2025-26) is a loosening of monetary policy during a period of excess demand in the economy.

Their state counterparts, many of whom seem to believe their job is to ignore their role in the economy while putting out their hands for more federal cash, have to dramatically lift their performances and tighten their belts.

They have to make some tough decisions because of two other issues at play and directly outside government control.

The first is the war started by Donald Trump against Iran. Brent crude started the year at $US60 a barrel. On Wednesday, it was $US115.

For the past two months, it has averaged above $US100 a barrel. This spike is feeding through the global economy, from bowsers to PVC pipes to agricultural fertilisers, and is one of the reasons that central banks everywhere are lifting their interest rates.

The second big factor is the one that is hurting the struggling gamers.

The AI construction boom is lifting business investment and pitting tech firms against each other in a semiconductor and chip war. That war has spilt over into the broader economy.

The September inflation figures showed the costs of games and toys have climbed 15.5 per cent over the past 12 months. Only petrol and diesel have gone up by more.

It’s the biggest increase in games and toys on record and is because demand for computer chips in games and consoles is running much, much faster than supply.

Prices for computer equipment, which fell 91 per cent through the first 25 years of this century, have climbed by 6.3 per cent over the past 12 months.

It’s why the price of a Nintendo Switch 2 has climbed by 10 per cent this year. Why the Sony PS5 is up by 20 per cent. A MacBook Neo by 17 per cent. IPhones and iPads are going up by even more.

The inflation figures were released around the same time that SK Hynix, one of the world’s biggest producers of computer chips and semiconductors, released its third quarter earnings report.

It showed average selling prices of its key products had climbed by 20 per cent over the past three months and up four-fold since last year. And it’s not going to get any better.

Company chief financial officer Kim Woo-hyun warned huge demand from across the world meant supply shortages were likely to “persist through to 2030”.

Gamers will have to go back to playing pick-up-sticks or dust-encrusted versions of Squatter if that comes to pass.

Treasury secretary Jenny Wilkinson, who sits on the Reserve Bank’s monetary policy committee, on Wednesday noted that the data centre building boom is competing for labour and resources with government infrastructure projects and the housing sector.

We don’t have to go back far in time to see what that situation means for ongoing inflation. Just look at the early 2000s mining boom.

Chalmers, Gallagher and Anthony Albanese are now clearly on notice that they have to play a larger role in easing demand in the Australian economy to deal with global inflationary pressures.

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Shane Wright is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X or email.

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