Australian inflation unexpectedly jumped in the June quarter, data showed Wednesday, adding pressure on the central bank to hike interest rates further and sending the local dollar to a record high.
The Australian Bureau of Statistics said the consumer price index rose 0.9 per cent in the three months to June compared with the first quarter, while it was 3.6 per cent higher year on year.
Both figures were above market expectations of 0.8 per cent and 3.5 per cent respectively.
Economists said the figures removed any chance of a cut in interest rates — which some analysts had touted this month as the domestic and global economies show signs of easing — and increased the likelihood of a hike.
'Clearly with this sort of inflation there is no respite,' UBS chief economist for Australia Scott Haslem told the AFP.
'The Reserve Bank of Australia is going to be looking for the first opportunity, or any signs that growth is stabilising or picking up, to lean against inflation.'
Dubbed the 'Wonder from Down Under' after it survived the global slump without dipping into recession, the Australian economy already has one of the highest official interest rates in the developed world at 4.75 per cent.
It was the first to raise rates as it recovered from the downturn and raised rates a total of 175 basis points between October 2009 and November 2010.
The central bank aims to keep inflation within a 2.0-3.0 per cent range and economists said it would not want to be caught 'behind the curve' as it was in 2006 and 2007 when interest rates remained at low levels.
'The signal for the RBA is crystal clear and if they are in any way competent, they will hike rates at the next meeting,' said ICAP senior economist Adam Carr.
'The consequences of them delaying for another six months could be dire in 2012. They really need to get a grip and do what is good for the country.'
Source : New Age
