SYDNEY, AUSTRALIA – DECEMBER 06: Pedestrians and shoppers move along George Street on December 06, 2024 in Sydney, Australia.
Lisa Maree Williams | Getty Images News | Getty Images
Australia’s inflation rate soared to 4.09% in the first quarter from a year earlier, marking its highest level in more than two years.
The reading was lower than the 4.2% expected by economists polled by Reuters, but it still raised the prospects of an interest rate hike by the Reserve Bank of Australia.
Prices increased 1.4% from the previous quarter. In March, inflation climbed to 4.6%, driven mainly by higher costs for housing, transport and food.
The 4.6% reading was the highest since Australia began publishing monthly consumer price index data in 2025.
The data also comes ahead of the Reserve Bank of Australia’s policy meeting next week. The central bank raised rates to 4.1% at its March meeting, the highest level since April 2025.
“Developments in the Middle East remain highly uncertain, but under a wide range of possible scenarios could add to global and domestic inflation,” the RBA said after its March meeting.
The board said it expects inflation to remain above its 2%–3% target for some time.
RBA Governor Michelle Bullock said board members agreed that rates may need to rise further, though they differed on timing.
Minutes from the meeting showed policymakers viewed inflation as still “too high” and said a near-term increase may be needed.
“The rise in oil prices had further increased the risk that inflation would remain above target for a prolonged period,” the minutes said.
Australia’s economy grew 2.6% from a year earlier in the fourth quarter, its fastest pace in two years, beating expectations.
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