Economics have warned that Australia’s inflation rate is likely to reach 5% by June, a level last seen in 2008 when the crude oil price topped $US160 a barrel.
Diana Mousina of AMP says the invasion of Ukraine has resulted in higher consumer prices, while the floods in NSW and Queensland will put upward pressure on fruit and vegetable prices. Mousina says it seems that price pressures are becoming stronger and more entrenched, which is likely to prompt the Reserve Bank to increase the cash rate sooner than expected. She forecasts that the first rate rise will occur in June, as inflation and wages data for the March quarter is likely to be much higher than the central bank had anticipated.
From The SMH:
