By James Glynn
SYDNEY–Australian consumer prices rose by more than expected in the fourth quarter, dashing hopes that the Reserve Bank of Australia would soon pull back from aggressively raising interest rates.
The jump in prices came as Australians eagerly booked domestic and international holidays, throwing off the shackles that have kept them at home through years of sporadic Covid-19 lockdowns.
Inflation in the fourth quarter was 7.8% compared with the same period a year earlier, more than the 7.6% expected by economists. In quarterly terms, inflation was 1.9%, the Australian Bureau of Statistics said Wednesday.
Core inflation was 1.7% in the fourth quarter from the third quarter, beating expectations for 1.5%, the ABS said.
The inflation data is worse than expected by economists, but still relatively in line with recent forecasts by the RBA and the government. The results suggest the RBA has further interest rate hikes to deliver, having already rolled out consecutive monthly increases since May last year.
Prices for domestic holiday travel and accommodation jumped 13.3% in the fourth quarter, while the cost of international holiday travel and accommodation jumped 7.6%, the ABS said.
Electricity prices climbed 8.6% in the same period following the removal of government support payments to households to offset soaring electricity costs in Western Australia, the ABS said.
Growth in prices for new dwellings slowed relative to recent quarters, but remained stronger than historic norms, the ABS said. Labor and material costs are driving price growth for new homes but there are signs they are easing, it added.
Write to James Glynn at [email protected]