Albanese warns of tough budget as Coalition promises ‘hand-to-hand combat’ over cost of living

Labor to introduce legislation to fulfil an election pledge to lower the price of medicines

The prime minister, Anthony Albanese, has told his MPs to brace for difficult decisions" in the government's first budget as he flags cost of living relief in the face of further interest rate hikes.

As the Reserve Bank of Australia lifted the official cash rate to a seven-year high of 2.35% on Tuesday, Albanese said he was aware of the impact it would have on families already feeling the pinch from rising inflation.