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Fresh statistics unveiled by the Australian Bureau of Statistics today indicate a 4.6 percent surge in the consumer price index over the year leading up to March, marking an increase from February’s 3.7 percent.
The ABS reports a staggering 32.8 percent climb in fuel prices for March, setting a record for the highest monthly increase ever recorded.
On a more reassuring note for borrowers concerned about potential interest rate hikes, the trimmed mean—a favored gauge of underlying inflation by the Reserve Bank of Australia—held steady at 3.3 percent.
Before the release of today’s figures, the financial markets had been anticipating a roughly 75 percent chance of an interest rate increase at the upcoming meeting of the RBA’s monetary policy board next week, with all major banks predicting a rise.
Charles Croucher, Nine’s Political Editor, highlighted that transport expenses have been a major factor contributing to the unprecedented monthly inflation spike.
”This is coming from the bowser, and it’s jumping on board the inflation that was already outside the RBA’s target band,” Croucher said.
“We were already in a bad spot, this has just made it a whole lot worse.”
Croucher warned that yet another rate hike at the Reserve Bank’s May meeting is “almost inevitable”.
Oxford Economics Australia economist Harry McAuley agreed that unwelcome rate announcements are likely to be on the agenda next month.
He said oil price shocks are a central bank’s “worst nightmare” and that the RBA has a long road ahead to push the soaring inflation down.
“But the longer the Strait remains closed, the fewer options the board will have; a prolonged closure would force the RBA’s hand to hike rates multiple times this year to tame inflation and inflation expectations,” McAuley said.
Inflation will get worse: Chalmers
The inflation figure may increase even further before it drops again as the Iran war continues, Treasurer Jim Chalmers said.
Chalmers addressed the media following the announcement of a 4.6 per cent inflation and offered a grim prediction for the next few months.
“This war could drive inflation up even higher before it comes back down again,” he said.
“Treasury’s expectation is that inflation is likely to peak higher than this, but they are still finalising their forecasts ahead of the budget next month.”
But in a small triumph for the government’s fuel-saving measures, Chalmers said inflation would have been even higher if the excise had not been halved.
“For the next couple of months, our fuel excise cut has been a very important factor, taking some of the sting out of fuel prices, and that’s reflected in the movement in fuel prices,” he added.
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