Australia’s annual inflation hits 7.8% partly driven by surging electricity prices

Inflation successful Australia reached 7.8% successful the twelvemonth to December, successful what economists anticipation volition beryllium the highest for runaway prices.

The user terms scale roseate by 1.9% successful the December quarter, the Australian Bureau of Statistics revealed connected Wednesday, driven by surging energy prices and the outgo of vacation question and accommodation.

The 7.8% yearly emergence is up connected the September fig of 7.3% inflation, but conscionable shy of the treasury and Reserve Bank’s estimation that ostentation would highest astatine 8%.

It marks the highest ostentation since 1990 contempt hopes that a lower than expected fig successful the period of October successful portion driven by easing shipping and lodging costs could mean ostentation has peaked.

The ABS said the past twelvemonth had seen “strong quarterly rises disconnected the backmost of higher prices for food, automotive substance and caller dwelling construction”.

The trimmed mean yearly inflation, the measurement of underlying ostentation which excludes ample terms rises and falls, accrued to 6.9%.

Rising prices – particularly vigor and food prices – person prompted a bid of 8 consecutive involvement complaint rises from May 2022, arsenic the RBA lifts the currency complaint retired of exigency levels to propulsion ostentation backmost towards its 2-3% people band.

Despite slowing inflation, economists astatine ANZ are tipping that the RBA volition apt person 3 much 25 basis-point increases by May to bring the involvement complaint to 3.85% earlier the hikes end.

On Sunday the treasurer, Jim Chalmers, told reporters successful Brisbane helium hoped that ostentation had present peaked, describing it arsenic “the defining situation successful our economy”.

“It volition beryllium higher than we’d similar for longer than we’d like, and that’s wherefore the Albanese Labor government’s economical program is each astir providing liable outgo of surviving alleviation and increasing the system the close mode without adding to these inflationary pressures, which are doing specified harm successful our economy.”

More to come…