Australia's high inflation may trigger interest rate hikes

By @ibtimesau on

The higher-than-expected inflation rates in Australia gives the central bank more reason to increase interest rates, analysts said.

The upward trend taken by consumer prices is most evident in food and petrol prices, according to the latest government data published by the Australian Bureau of Statistics today.

The rise in Australia's consumer prices also had an impact on the value of the Aussie dollar against the US greenback.

The Australian dollar strengthened to a record after a government report showed consumer prices increased by the most in five years, giving the central bank more reason to raise benchmark rates.

The Australian dollar climbed to $1.0833 as of 4:03 p.m. in Sydney from $1.0785 in New York yesterday, after rising to $1.0852, the strongest since it was freely floated in 1983. New Zealand's dollar traded at 80.59 U.S. cents from 80.57 cents, after reaching 81.08, the highest since March 2008. The currency appreciated 0.2 percent to 65.83 yen.

Australian consumer prices jumped in the first quarter as the country coped with the lingering impact of the summer's floods pushed up food costs and petroleum prices went up with the extent of the Middle East unrest.

Among Australia's capital cities, the highest recorded consumer prices had been in Melbourne.

The country's consumer price index rose 1.6 percent in the March quarter - its largest quarterly jump in almost five years.

From a year earlier, Australia's inflation rate was 3.3 percent higher, the Australian Bureau of Statistics reported. The results also beat analysts' forecasts of 3 percent for the period.

More from IBT Markets: Newsletter: To receive Global Markets update, sign up here

Join the Discussion