Inflation skyrockets to the highest level in 21 years as the cost of everyday items soars: Why it’s going to hurt EVERY Australian
- Australia’s inflation has surged by 5.1 per cent – the fastest pace in 21 years
- Headline inflation in year to March above Reserve Bank’s 2 to 3 per cent target
- This increases chance of a May 3 rate rise – just 18 days before May 21 election
- How is the cost of living affecting you? Email us at email@example.com
Australia’s inflation has surged by 5.1 per cent – the fastest pace in 21 years – sparking fears interest rates could rise as soon as next week.
Officials on Wednesday confirmed the consumer price index in the year to March had soared at an even more dramatic pace than it did at the height of the Global Financial Crisis.
The rate of price increases is now at the highest level since June 2001, with headline inflation higher than the 4.5 per cent pace markets were expecting.
That makes an early, pre-election interest rate rise on May 3 more likely – just 18 days before voters go to the polls.
That would mark the first election campaign rate rise from the Reserve Bank of Australia since November 2007, shortly before Liberal prime minister John Howard lost power.
Australia’s inflation has surged by 5.1 per cent – the fastest pace in 21 years (pictured is a shopper in Sydney)
Given the inflation rate is also significantly well above the Reserve Bank of Australia’s two to three per cent target, borrowers could also be hit with a big increase in interest rates in May or June.
Australian Bureau of Statistics figures showed home prices climbing by 5.7 per cent as petrol prices soared by 11 per cent.
That came even as the federal government halving fuel excise to 22.1 cents a litre in the March 29 Budget after average unleaded prices had surged above $2 a litre for the first time ever.
A Reserve Bank cash rate increase, from a record low of 0.1 per cent, would mark the first increase since November 2010.
The 5.1 per cent increase was dramatically higher than the 3.5 per cent annual increase in the December quarter and was the highest since the 6.1 per cent increase in the June quarter of 2001.
The last time inflation was this high two decades ago, the RBA kept on raising rates from 2002 until 2008 when the GFC struck.