By Poppy Johnston For Australian Associated Press and Stephen Johnson For Daily Mail Australia
02:47 29 May 2024, updated 03:56 29 May 2024
Inflation has come in above expectations and lifted 3.6 per cent in the 12 months to April.
The monthly consumer price index rose a touch from 3.5 per cent year-on-year to March, the Australian Bureau of Statistics said.
Economists expected the monthly price gauge, which can be volatile and is not as comprehensive as the quarterly indicator, to moderate a little to 3.4 per cent in April.
Households have been worn financially thin by the elevated cost of living and string of interest rates that followed to bring price pressures under control.
The Reserve Bank of Australia remains alert to inflation risks as it works to bring consumer price growth back within its two per cent and three per cent target range.
Central bank forecasts have inflation taking until late 2025 to fall within the target range.
ABS head of prices statistics Michelle Marquardt said inflation had been relatively stable over the past five months.
‘Although this is the second month in a row where annual inflation has had a small increase,’ she said on Wednesday.
The top contributors to the annual increase were housing (4.9 per cent), food and non-alcoholic beverages (3.8 per cent), alcohol and tobacco (6.5 per cent), and transport (4.2 per cent).
The result is likely to stoke fears that the RBA may need to deliver another rate hike, which governor Michele Bullock has not ruled out.
‘We don’t think we necessarily have to tighten again but we can’t rule it out,’ she told reporters in Sydney earlier this month.
‘If we have to, we will. If we really think that inflation is going to be persistent and significantly above our forecasts, we will tighten again.
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‘We’ve always felt that it was a bit too soon to declare victory and I think the numbers in recent weeks have demonstrated that for us.’
Ms Bullock also confirmed a rate rise had been seriously considered during the RBA’s two-day board meeting.
‘Yes, that was one of the things the board discussed,’ she said.
‘So, the board did discuss the option of raising interest rates.’
The cash rate is already at a 12-year high of 4.35 per cent and borrowers are paying 68 per cent more a month compared with two years ago – following 13 interest rate rises in 18 months.
‘The rise in interest rates that has been required to bring down inflation has been painful for many people,’ she said.
‘Inflation is bad for everyone and we have to see the job through.
‘The path will likely continue to be bumpy and we should all be prepared for that.’