Inflation above expectations

Posted by Daniel Palmer on 23rd April 2008

The Reserve Bank of Australia is now more likely to consider raising interest rates again in May following the release of inflation data for the March quarter. CPI rose 1.3% in the quarter, resulting in a CPI figure for the year to the March quarter of 4.2%.

The figure was higher than analyst forecasts of 4% and markedly above the 2-3% level which the RBA targets, indicating that rates could rise next month. Education and health prices were the biggest contributors to the high quarterly figure with food prices also rising steeply.

Food was up 2.1% for the quarter and 5.7% for the year and, with global food prices on the rise, Australian food prices are likely to continue to escalate.