Australia’s March quarter consumer price index is tipped to show both the headline CPI and the trimmed mean comfortably above the Reserve Bank of Australia’s 2.5% target. That data lands on Wednesday and arrives ahead of the full pass-through of sharply higher fuel costs into household budgets.
The separate monthly CPI indicator is expected to reveal a clear jump in petrol prices, with analysts warning an even larger increase is likely in April.
Economists point out that Australia’s central bank took a more cautious path on rate rises after the Covid-19 pandemic than many of its global peers, prioritising employment gains over rapid tightening. That strategy helped deliver strong job outcomes but now leaves the RBA confronting stubbornly high underlying inflation just as energy costs spike.
The latest oil-driven price surge risks weighing on economic growth, which in turn could cool medium-term inflation expectations and add another layer of complexity to policy decisions. Against that backdrop, the central bank must judge whether further interest rate hikes are needed to rein in prices without tipping the economy too far into slowdown.
Source: The Australian
