Mr Howard and the Treasurer, Peter Costello, both claimed that if Labor were elected, the economy would plunge into recession because its industrial relations policy would cause a wage-driven inflation outbreak.
The Labor leader, Kevin Rudd, dismissed this as "outrageous".
He said Mr Howard and Mr Costello were "always happy to take responsibility when there is a decent number and always you can't see their trail for dust when the number is less attractive.
"My challenge to Mr Costello and Mr Howard is to have the courage to own responsibility for their policy failures in fighting the fight against inflation up until now," he said.
He said the latest inflation figures showed the Government had failed to fight the threat by not tackling skills shortages and infrastructure bottlenecks that were pushing up underlying inflation.
"Those paying the price for this are working families on home mortgages," Mr Rudd said.
"Those home mortgages are causing great stress around family breakfast tables as those families seek to do their budgets."
Mr Rudd said the Government had "systematically ignored" repeated Reserve Bank warnings about skills shortages and infrastructure bottlenecks.
By contrast, he said, Labor had policies on skills and infrastructure which would boost the economy's capacity to grow without fuelling inflation.
Mr Rudd also said Labor would seek to reduce inflationary pressures by refraining from matching the Government's election spending promises.
'Sydney Morning Herald' Monday 29th October 2007 By Phillip Coorey, Jessica Irvine and Mark Davis.