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Chalmers is taking rising oil prices into account for the upcoming federal budget in May, acknowledging that the current inflation rate of 3.8% could rise even further, surpassing the target range of two to three percent.
“We’ve considered several scenarios with realistic assumptions about global oil prices and their potential impact on inflation, including the duration of such effects,” he explained in an interview with Sky News.
“If we were finalizing those forecasts today, we’d expect inflation to peak somewhere between the mid to high four percent range,” he added.
Despite these projections, Chalmers dismissed concerns about an impending recession.
Both federal and state governments have convened emergency meetings to address the potential ripple effects of increased fuel prices on retailers, distributors, and ultimately, consumers.
“Shipping companies are rightfully nervous at the moment, and as long as they’re nervous, the markets are nervous, people are buying fuel and at an increased rate,” Nine political editor Charles Croucher told Today.
“It all serves to push up prices even further beyond all that.”
The global conflict will form part of the discussion when the Reserve Bank meets next week to set the interest rates.
All four of the big banks have tipped that there will be another rate increase. 
Croucher said this could leave the average person paying an estimated $220 more a month on rising home loans, fuel and groceries. 
The war in Iran has entered its third week, cutting off the Strait of Hormuz that typically allows one-fifth of the world’s oil supply to pass through to markets.
He said the conflict should be over soon, but warned that it could continue longer if necessary.
Australia, which imports 90 per cent of its oil, has also released 20 per cent of its petrol and diesel reserves to help areas experiencing low supply.
Energy Minister Chris Bowen this week confirmed the country has 1.6 billion litres of petrol, 2.7 billion litres of diesel and 800 million litres of jet fuel available – translating to 37 days’ worth of petrol, 30 days of diesel and 29 days of jet fuel.
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