Australian Inflation Set to Remain Elevated Despite Rate Hikes

Reserve Bank Governor Michele Bullock has issued a warning that inflation in Australia will likely remain elevated for some time. In her address to the House of Representatives Standing Committee on Economics, she stated that both headline and underlying measures of inflation have been around or slightly above 3.5 per cent over the past 12 months.

The RBA has raised the cash rate by 50 basis points since February and a cumulative 75 points this year in an effort to drive back inflation to its target range. However, Bullock said that capacity pressures in the Australian economy, partly reflected in higher oil prices, have added to inflationary pressures.

The conflict in the Middle East has also had an impact on global fuel prices and contributed to higher input costs for businesses, which have been passed through to consumers as higher prices. As a result, inflation is likely to remain elevated 'for some time', Bullock said.