Sydney October 26 2022: Australian inflation raced to a 32-year high last quarter as the cost of home building and gas surged, a shock result that stoked pressure for a return to more aggressive rate hikes by the country’s central bank.
Data from the Australian Bureau of Statistics (ABS) on Wednesday showed the consumer price index (CPI) jumped 1.8% in the September quarter, topping market forecasts of 1.6%.
The annual rate shot up to 7.3%, from 6.1%, the highest since 1990 and almost three times the pace of wage growth.
A closely watched measure of core inflation, the trimmed mean, also climbed 1.8% in the quarter, lifting the annual pace to 6.1% and again far above forecasts of 5.6%.
That would be unwelcome news to the Reserve Bank of Australia (RBA) which had thought core inflation would peak at 6.0% in the December quarter, with headline inflation topping at 7.75%.
Instead, analysts were warning that both core and headline measures were certain to spike even further this quarter with the ABS’s new monthly CPI accelerating in September.
“The upshot is that CPI inflation will approach 8% in Q4,” said Marcel Thieliant, a senior economist at Capital Economics.
“The stronger-than-expected rise in consumer prices is consistent with our forecast that the RBA will hike rates more aggressively than most anticipate.”
ANZ raised its forecast for the cash rate to peak at 3.85% in May next year from 3.6% previously.
