Australia’s consumer prices surged 4.09 per cent year on year in the first quarter, the Australian Bureau of Statistics reports, marking the steepest rise since early 2024 and reigniting pressure on the Reserve Bank of Australia to consider fresh interest rate increases.
The figure came in below the 4.2 per cent forecast compiled by Reuters from economists, offering some respite, yet it signals enduring price pressures that could prompt the central bank to act decisively at its policy meeting next week.
Prices advanced 1.4 per cent from the previous quarter, accelerating sharply to 4.6 per cent by March, driven primarily by higher costs for housing rents, transport fuels, and everyday groceries.
This March peak represents the highest monthly consumer price index since the nation began publishing such data monthly in 2025. Coming just days before the RBA board convenes, the numbers arrive against a backdrop of the bank’s March decision to lift its cash rate to 4.1 per cent, the highest in nearly a year.
“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 cautioned after that meeting.
Officials expect prices to stay above the 2 to 3 per cent target band for an extended period.
RBA Governor Michele Bullock said board members concurred that further hikes might prove necessary, even as they debated the precise timing. The meeting minutes painted inflation as persistently too high, warning that 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,” they noted.
Geopolitical tensions have pushed Brent crude beyond 85 dollars per barrel this quarter, according to Bloomberg, amplifying transport expenses via Red Sea shipping woes, while annual rent inflation reached 7.1 per cent on the ABS trimmed measure and food costs hovered above 4 per cent.
The economy provides a brighter note, with fourth-quarter 2025 GDP growth hitting 2.6 per cent year on year, its strongest in two years and surpassing expectations, thanks to robust consumer spending and exports. Still, analysts at ANZ Bank have raised the odds of a May rate rise to 60 per cent from 40 per cent prior to the data release, per Reuters.