Support for Labor is at its lowest ebb since the 2022 election, with the coalition seizing on a by-election win as a positive sign.
Labor's primary vote has fallen two points to 36 per cent, according to a Newspoll published in The Australian on Monday - its weakest result since it won office with base support of 32.6 per cent.
But coalition strategists say retaining the Queensland seat of Fadden, on the back of a solid vote result in the state in 2022, shows a comeback is possible.
One coalition insider told AAP there was a sense of changed momentum in the Sunshine State, which goes to an election in October 2024.
The LNP's Cameron Caldwell won Fadden with a 2.5 per cent swing in Saturday's by-election, holding it with a 13.3 per cent margin.
Labor's candidate Letitia Del Fabbro polled 22 per cent of the primary vote.
"That means only about one in every five people want to vote for Labor," former Nationals leader Barnaby Joyce said.
The coalition's 34 per cent reading in the latest Newspoll is down a point since the last survey, but up three points on its lowest position in September 2022.
But worryingly for major parties, support for the Greens and Pauline Hanson's One Nation each rose a point to 12 and seven per cent respectively.
Support for other minor parties and independents also rose a point to 11 per cent.
Labor continues to hold a solid 55-45 two-party lead, according to the poll of 1570 Australian voters between July 12 and 15.
Finance Minister Katy Gallagher said the results from the Fadden by-election were expected.
"The matters aren't necessarily linked, but we are certainly focused on cost of living pressures," she told ABC radio.
"In relation to that by-election, it was an expected outcome from our point of view and we ran an excellent candidate."
Shadow treasurer Angus Taylor said inflation issues were front of mind for voters.
"Inflationary pressures are biting deep and hard. It's what Australians want to deal with," he said.
Tasmanian senator Jacqui Lambie said worsening economic conditions would make the major parties' seats "ripe for the picking" for independents.
Labor leader Anthony Albanese's approval ratings are mainly unchanged, remaining at 52 per cent - the lowest level since he was elected in May 2022.
His dissatisfaction rating dropped a point to 41 per cent, giving him a net approval rating of plus 11.
Opposition Leader Peter Dutton's approval ratings fell two points to 36 per cent, while his dissatisfaction rating was unchanged from June's poll at 49 per cent.
His net approval rating is minus 13.
The preferred prime minister ratings reflected these results with Mr Albanese lifting two points to 54 per cent and Mr Dutton dropping three points to 29 per cent.
Environment Minister Tanya Plibersek said despite the government losing ground, Labor was unconcerned by the result.
"Polls jump around all the time and we don't take too much notice of it, it's still a very strong position for the government," she told Seven's Sunrise program.
Mr Joyce said rising prices were turning people off the government.
"Power prices, food prices, fuel prices, rent, the Labor Party seems to be oblivious to that and the polls are now reflecting their oblivion," he said.
